SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[x] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
(Name of Registrant as Specified In Its Charter)
Fidelity Fixed-Income Trust
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which
transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total Fee Paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a) (2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
FIDELITY(R) INVESTMENT GRADE BOND FUND
FIDELITY SHORT-TERM BOND FUND
SPARTAN(R) GOVERNMENT INCOME FUND
FIDELITY HIGH INCOME FUND
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND
FUNDS OF
FIDELITY FIXED-INCOME TRUST
82 Devonshire Street, Boston, Massachusetts 02109
1-800-544-8888
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
To the Shareholders of the above funds:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the
Meeting) of Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond Fund,
Spartan Government Income Fund, Fidelity High Income Fund, and Spartan
Short-Intermediate Government Fund (the funds) will be held at the office of
Fidelity Fixed-Income Trust (the trust), 82 Devonshire Street, Boston,
Massachusetts 02109 on April 14, 1999, at 9:00 a.m. The purpose of the Meeting
is to consider and act upon the following proposals, and to transact such other
business as may properly come before the Meeting or any adjournments thereof.
1. To elect a Board of Trustees.
2. To ratify the selection of PricewaterhouseCoopers LLP as
independent accountants of the funds.
3. To authorize the Trustees to adopt an amended and restated
Declaration of Trust.
4. To adopt a new fundamental investment policy for each fund
permitting the fund to invest all of its assets in another
open-end investment company managed by FMR or an affiliate with
substantially the same investment objective and policies.
5. To approve an amended management contract for Fidelity Investment
Grade Bond Fund and Fidelity Short-Term Bond Fund.
6. To approve an amended management contract, including a management
fee structure change, for Fidelity High Income Fund.
<PAGE>
7. To approve an amended sub-advisory agreement with Fidelity
Management & Research (U.K.) Inc. for Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, and Fidelity High Income
Fund.
8. To approve an amended sub-advisory agreement with Fidelity
Management & Research (Far East) Inc. for Fidelity Investment
Grade Bond Fund, Fidelity Short-Term Bond Fund, and Fidelity High
Income Fund.
9. To eliminate certain fundamental investment policies of Fidelity
Investment Grade Bond Fund.
10. To eliminate certain fundamental investment policies of Fidelity
Short-Term Bond Fund.
11. To eliminate certain fundamental investment policies of Spartan
Government Income Fund.
12. To eliminate certain fundamental investment policies of Fidelity
High Income Fund.
13. To amend the fundamental investment limitation concerning real
estate for Spartan Government Income Fund.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
14. To amend the fundamental investment limitation concerning
diversification to exclude "securities of other investment
companies" from the limitation for each fund.
15. To amend the fundamental investment limitation concerning
underwriting for Fidelity Short-Term Bond Fund.
16. To amend the fundamental investment limitation concerning
concentration of investments in a single industry for Fidelity
Short-Term Bond Fund and Fidelity High Income Fund.
The Board of Trustees has fixed the close of business on February 15,
1999 as the record date for the determination of the shareholders of each of the
funds entitled to notice of, and to vote at, such Meeting and any adjournments
thereof.
By order of the Board of Trustees,
ERIC D. ROITER, Secretary
February 15, 1999
<PAGE>
YOUR VOTE IS IMPORTANT -
PLEASE RETURN YOUR PROXY CARD PROMPTLY.
SHAREHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. ANY
SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IS URGED TO INDICATE
VOTING INSTRUCTIONS ON THE ENCLOSED PROXY CARD, DATE AND SIGN IT, AND RETURN IT
IN THE ENVELOPE PROVIDED, WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES.
IN ORDER TO AVOID UNNECESSARY EXPENSE, WE ASK YOUR COOPERATION IN MAILING YOUR
PROXY CARD PROMPTLY, NO MATTER HOW LARGE OR SMALL YOUR HOLDINGS MAY BE.
INSTRUCTIONS FOR EXECUTING PROXY CARD
The following general rules for executing proxy cards may be of
assistance to you and help avoid the time and expense involved in validating
your vote if you fail to execute your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Your name should be signed
exactly as it appears in the registration on the
proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name
of the party signing should conform exactly to a name
shown in the registration.
3. All other accounts should show the capacity of the
individual signing. This can be shown either in the
form of the account registration itself or by the
individual executing the proxy card. For example:
REGISTRATION VALID SIGNATURE
------------ ---------------
A. 1) ABC Corp. John Smith, Treasurer
2) ABC Corp. John Smith, Treasurer
c/o John Smith, Treasurer
B. 1) ABC Corp. Profit Ann B. Collins, Trustee
Sharing Plan
2) ABC Trust Ann B. Collins, Trustee
3) Ann B. Collins, Trustee Ann B. Collins, Trustee
u/t/d 12/28/78
C. 1) Anthony B. Craft, Cust. Anthony B. Craft
f/b/o Anthony B. Craft, Jr.
UGMA
<PAGE>
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS OF
FIDELITY FIXED-INCOME TRUST:
FIDELITY INVESTMENT GRADE BOND FUND
FIDELITY SHORT-TERM BOND FUND
SPARTAN GOVERNMENT INCOME FUND
FIDELITY HIGH INCOME FUND
SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND
TO BE HELD ON APRIL 14, 1999
This Proxy Statement is furnished in connection with a solicitation of
proxies made by, and on behalf of, the Board of Trustees of Fidelity
Fixed-Income Trust (the trust) to be used at the Special Meeting of Shareholders
of Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond Fund, Spartan
Government Income Fund, Fidelity High Income Fund, and Spartan
Short-Intermediate Government Fund (the funds) and at any adjournments thereof
(the Meeting), to be held on April 14, 1999 at 9:00 a.m. at 82 Devonshire
Street, Boston, Massachusetts 02109, the principal executive office of the trust
and Fidelity Management & Research Company (FMR), the funds' investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice. The
solicitation is being made primarily by the mailing of this Proxy Statement and
the accompanying proxy card on or about February 15, 1999. Supplementary
solicitations may be made by mail, telephone, telegraph, facsimile, electronic
means or by personal interview by representatives of the trust. In addition,
Management Information Services Corp. (MIS) and D.F. King & Co., Inc. may be
paid on a per-call basis to solicit shareholders on behalf of the funds at an
anticipated cost of approximately $______ (Fidelity Investment Grade Bond Fund),
$______ (Fidelity Short-Term Bond Fund), $____ (Spartan Government Income Fund),
$______ (Fidelity High Income Fund), and $_____ (Spartan Short-Intermediate
Government Fund), respectively. For Fidelity Investment Grade Bond Fund, the
expenses in connection with preparing this Proxy Statement and its enclosures
and of all solicitations will be paid by the fund. For Fidelity Short-Term Bond
Fund, the expenses in connection with preparing this Proxy Statement and its
enclosures and of all solicitations will be paid by the fund, provided the
expenses do not exceed the fund's existing expense cap of 0.65%. Expenses
exceeding the fund's expense cap will be paid by FMR. For Spartan Government
Income Fund, Fidelity High Income Fund, and Spartan Short-Intermediate
Government Fund, the expenses in connection with preparing this Proxy Statement
and its enclosures and of all solicitations will be borne by FMR. The funds (FMR
for Spartan Government Income Fund, Fidelity High Income Fund, and Spartan
Short-Intermediate Government Fund) will reimburse brokerage firms and others
for their reasonable expenses in forwarding solicitation material to the
beneficial owners of shares. The principal business address of Fidelity
Distributors Corporation (FDC), the funds' principal underwriter and
distribution agent, and Fidelity Management & Research (U.K.) Inc. (FMR U.K.)
<PAGE>
and Fidelity Management & Research (Far East) Inc. (FMR Far East), subadvisers
to Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond Fund, and
Fidelity High Income Fund, is 82 Devonshire Street, Boston, Massachusetts 02109.
The principal business address of Fidelity Investments Money Management, Inc.
(FIMM), subadviser to Fidelity Investment Grade Bond Fund, Fidelity Short-Term
Bond Fund, Spartan Government Income Fund, and Spartan Short-Intermediate
Government Fund, is 1 Spartan Way, Merrimack, New Hampshire 03054.
If the enclosed proxy card is executed and returned, it may
nevertheless be revoked at any time prior to its use by written notification
received by the trust, by the execution of a later-dated proxy card, by the
trust's receipt of a subsequent valid telephonic vote, or by attending the
Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and are not
revoked, will be voted at the Meeting. Shares represented by such proxies will
be voted in accordance with the instructions thereon. If no specification is
made on a proxy card, it will be voted FOR the matters specified on the proxy
card. Only proxies that are voted will be counted towards establishing a quorum.
Broker non-votes are not considered voted for this purpose. Shareholders should
note that while votes to ABSTAIN will count toward establishing a quorum,
passage of any proposal being considered at the Meeting will occur only if a
sufficient number of votes are cast FOR the proposal. Accordingly, votes to
ABSTAIN and votes AGAINST will have the same effect in determining whether the
proposal is approved.
The funds may also arrange to have votes recorded by telephone. For
Fidelity Investment Grade Bond Fund, the expenses in connection with telephone
voting will be paid by the fund. For Fidelity Short-Term Bond Fund, the expenses
in connection with telephone voting will be paid by the fund, provided the
expenses do not exceed the fund's existing expense cap of 0.65%. Expenses
exceeding the fund's expense cap will be paid by FMR. For Spartan Government
Income Fund, Fidelity High Income Fund, and Spartan Short-Intermediate
Government Fund, the expenses in connection with telephone voting will be borne
by FMR. If the funds record votes by telephone, they will use procedures
designed to authenticate shareholders' identities, to allow shareholders to
authorize the voting of their shares in accordance with their instructions, and
to confirm that their instructions have been properly recorded. Proxies voted by
telephone may be revoked at any time before they are voted in the same manner
that proxies voted by mail may be revoked. D.F. King & Co., Inc. may be paid on
a per-call basis for vote-by-phone solicitations on behalf of the funds at an
anticipated cost of approximately $_____ (Fidelity Investment Grade Bond Fund),
$______ (Fidelity Short-Term Bond Fund), $_____ (Spartan Government Income
Fund), $______ (Fidelity High Income Fund), and $______ (Spartan
Short-Intermediate Government Fund), respectively.
If a quorum is not present at the Meeting, or if a quorum is present at
the Meeting but sufficient votes to approve one or more of the proposed items
are not received, or if other matters arise requiring shareholder attention, the
persons named as proxy agents may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. Any such adjournment will
2
<PAGE>
require the affirmative vote of a majority of those shares present at the
Meeting or represented by proxy. When voting on a proposed adjournment, the
persons named as proxy agents will vote FOR the proposed adjournment all shares
that they are entitled to vote with respect to each item, unless directed to
vote AGAINST the item, in which case such shares will be voted AGAINST the
proposed adjournment with respect to that item. A shareholder vote may be taken
on one or more of the items in this Proxy Statement prior to such adjournment if
sufficient votes have been received and it is otherwise appropriate.
Shares of each fund of the trust issued and outstanding as of November
30, 1998 are indicated in the following table:
Fidelity Investment Grade Bond Fund 287,857,267
Fidelity Short-Term Bond Fund 99,184,329
Spartan Government Income Fund 54,143,831
Fidelity High Income Fund 238,910,397
Spartan Short-Intermediate Government Fund 14,046,947
To the knowledge of the trust, substantial (5% or more) record or
beneficial ownership of the funds on November 30, 1998 was as follows:
Spartan Government Income Fund: Charitable Gift Fund, Boston, MA __________
(5.74%)
Spartan Short-Intermediate Government Fund: Bank of New York, New York, NY
__________ (6.24%)
To the knowledge of the trust, no other shareholder owned of record or
beneficially more than 5% of the outstanding shares of the funds on that date.
Shareholders of record at the close of business on February 15, 1999
will be entitled to vote at the Meeting. Each such shareholder will be entitled
to one vote for each dollar of net asset value held on that date.
FOR A FREE COPY OF EACH FUND'S ANNUAL REPORT FOR THE FISCAL YEAR ENDED
APRIL 30, 1998 AND THE SEMIANNUAL REPORT FOR THE FISCAL PERIOD ENDED OCTOBER 31,
1998 CALL 1-800-544-8888 OR WRITE TO FIDELITY DISTRIBUTORS CORPORATION AT 82
DEVONSHIRE STREET, BOSTON, MASSACHUSETTS 02109.
VOTE REQUIRED: A PLURALITY OF ALL VOTES CAST AT THE MEETING IS
SUFFICIENT TO APPROVE PROPOSAL 1 AND A MAJORITY OF ALL VOTES OF THE APPROPRIATE
FUND CAST AT THE MEETING IS SUFFICIENT TO APPROVE PROPOSAL 2. APPROVAL OF
PROPOSAL 3 REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING
VOTING SECURITIES" OF THE ENTIRE TRUST. APPROVAL OF PROPOSALS 4 THROUGH 16
REQUIRES THE AFFIRMATIVE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING
SECURITIES" OF THE APPROPRIATE FUND. UNDER THE INVESTMENT COMPANY ACT OF 1940
(THE 1940 ACT), THE VOTE OF A "MAJORITY OF THE OUTSTANDING VOTING SECURITIES"
MEANS THE AFFIRMATIVE VOTE OF THE LESSER OF (A) 67% OR MORE OF THE VOTING
SECURITIES PRESENT AT THE MEETING OR REPRESENTED BY PROXY IF THE HOLDERS OF MORE
3
<PAGE>
THAN 50% OF THE OUTSTANDING VOTING SECURITIES ARE PRESENT OR REPRESENTED BY
PROXY OR (B) MORE THAN 50% OF THE OUTSTANDING VOTING SECURITIES. BROKER
NON-VOTES ARE NOT CONSIDERED "PRESENT" FOR THIS PURPOSE.
The following table summarizes the proposals applicable to each fund.
<TABLE>
<CAPTION>
Proposal # Proposal Description Applicable Fund(s)
- ---------- -------------------- ------------------
<S> <C> <C>
1. To elect as Trustees the twelve nominees All
presented in proposal 1.
2. To ratify the selection of All
PricewaterhouseCoopers LLP as independent
accountants of the funds.
3. To authorize the Trustees to adopt an amended All
and restated Declaration of Trust.
4. To adopt a new fundamental investment policy All
for each fund permitting the fund to invest all of
its assets in another open-end investment
company managed by FMR or an affiliate with
substantially the same investment objective and
policies.
5. To approve an amended management contract Fidelity Investment Grade Bond
for the fund that would reduce the management Fund
fee payable to FMR by the fund as FMR's assets
under management increase. Fidelity Short-Term Bond Fund
6. To approve an amended management contract, Fidelity High Income Fund
including a management fee structure change
for the fund.
7. To approve an amended sub-advisory agreement Fidelity Investment Grade Bond Fund
with FMR U.K. to provide investment advice
and research services or investment management
services, and to allow FMR, FMR U.K., and the Fidelity Short-Term Bond Fund
trust, on behalf of the fund, to modify the
agreement subject to the requirements of the
Investment Company Act of 1940. Fidelity High Income Fund
8. To approve an amended sub-advisory agreement Fidelity Investment Grade Bond
with FMR Far Fund East to provide investment advice
and research services or investment management
services, and to allow FMR, FMR Far East, and Fidelity Short-Term Bond Fund
the trust, on behalf of the fund, to modify the
agreement subject to the requirements of the Fidelity High Income Fund
4
<PAGE>
Proposal # Proposal Description Applicable Fund(s)
- ---------- -------------------- ------------------
Investment Company Act of 1940.
9. To eliminate certain fundamental investment Fidelity Investment Grade Bond Fund
policies of the fund.
10. To eliminate certain fundamental investment Fidelity Short-Term Bond Fund
policies of the fund.
11. To eliminate certain fundamental investment Spartan Government Income
policies of the fund. Fund
12. To eliminate certain fundamental investment Fidelity High Income Fund
policies of the fund.
13. REAL ESTATE: To clarify and standardize the
language of the fundamental investment Spartan Government Income
limitation concerning purchases and sales of real Fund
estate.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
14. DIVERSIFICATION: To amend the fundamental All
diversification limitation to exclude "securitie
of other investment companies" from issuer
diversification limits.
15. UNDERWRITING: To clarify and standardize the Fidelity Short-Term Bond Fund
language of the fundamental investment
limitation concerning underwriting.
16. CONCENTRATION: To clarify and standardize the Fidelity Short-Term Bond Fund
language of the fundamental investment
limitation concerning industry concentration. Fidelity High Income Fund
</TABLE>
1. TO ELECT A BOARD OF TRUSTEES.
The purpose of this proposal is to elect a Board of Trustees of the
Trust. Pursuant to the provisions of the Declaration of Trust of Fidelity
Fixed-Income Trust, the Trustees have determined that the number of Trustees
shall be fixed at twelve. It is intended that the enclosed proxy card will be
voted for the election as Trustees of the twelve nominees listed below, unless
such authority has been withheld in the proxy card.
All nominees named below are currently Trustees of Fidelity
Fixed-Income Trust and have served in that capacity continuously since
originally elected or appointed. Robert M. Gates, William O. McCoy, Marvin L.
5
<PAGE>
Mann, and Robert C. Pozen were selected by the trust's Nominating and
Administration Committee (see page___) and were appointed to the Board in March
1997, January 1997, October 1993, and August 1997, respectively. None of the
nominees are related to one another. Those nominees indicated by an asterisk (*)
are "interested persons" of the trust by virtue of, among other things, their
affiliation with either the trust, the funds' investment adviser (FMR, or the
Adviser), or the funds' distribution agent, FDC. The business address of each
nominee who is an "interested person" is 82 Devonshire Street, Boston,
Massachusetts 02109, and the business address of all other nominees is Fidelity
Investments, P.O. Box 9235, Boston, Massachusetts 02205-9235. Except for Mr.
Gates, Mr. McCoy, and Mr. Pozen, each of the nominees is currently a Trustee of
___ registered investment companies advised by FMR. Each of Mr. Gates, Mr.
McCoy, and Mr. Pozen is currently a Trustee of ___ registered investment
companies advised by FMR.
In the election of Trustees, those twelve nominees receiving the
highest number of votes cast at the Meeting, providing a quorum is present,
shall be elected.
<TABLE>
<CAPTION>
Year of
Election or
Nominee (Age) Principal Occupation ** Appointment
- ------------- -------------------- -----------
<S> <C> <C>
Ralph F. Cox President of RABAR Enterprises (management 1991
consulting-engineering industry, 1994). Prior
(66) to February 1994, he was President of
Greenhill Petroleum Corporation (petroleum
exploration and production). Until March 1990,
Mr. Cox was President and Chief Operating
Officer of Union Pacific Resources Company
(exploration and production). He is a
Director of USA Waste Services, Inc. (non-
hazardous waste, 1993), CH2M Hill Companies
(engineering), Rio Grande, Inc. (oil and gas
production), and Daniel Industries (petroleum
measurement equipment manufacturer). In
addition, he is a member of advisory boards
of Texas A&M University and the University of
Texas at Austin.
Phyllis Burke Davis Prior to her retirement in September 1991, Mrs. 1992
Davis was the Senior Vice President of Corporate
(67) Affairs of Avon Products, Inc. She is currently
a Director of BellSouth Corporation (tele-
communications), Eaton Corporation (manufacturing,
1991), and the TJX Companies, Inc. (retail stores),
and previously served as a Director of Hallmark
Cards, Inc. (1985-1991) and Nabisco Brands,
Inc. In addition, she is a member of the
President's Advisory Council of The University
of Vermont School of Business Administration.
6
<PAGE>
Year of
Election or
Nominee (Age) Principal Occupation ** Appointment
- ------------- -------------------- -----------
Robert M. Gates Consultant, author, and lecturer (1993). Mr. Gates 1997
was Director of the Central Intelligence Agency
(55) (CIA) from 1991-1993. From 1989 to 1991, Mr.
Gates served as Assistant to the President
of the United States and Deputy National
Security Advisor. Mr. Gates is a Director
of LucasVarity PLC (automotive components
and diesel engines), Charles Stark Draper
Laboratory (non-profit), NACCO Industries, Inc.
(mining and manufacturing), and TRW Inc. (original
equipment and replacement products). Mr. Gates
also is a Trustee of the Forum for
International Policy and of the Endowment
Association of the College of William and
Mary. In addition, he is a member of the
National Executive Board of the Boy Scouts of
America.
*Edward C. Johnson 3d President, is Chairman, Chief Executive Officer and 1984
a Director of FMR Corp.; a Director and Chairman
(68) of the Board and of the Executive Committee of FMR;
Chairman and a Director of Fidelity
Investments Money Management, Inc. (1998),
Fidelity Management & Research (U.K.) Inc.,
and Fidelity Management & Research (Far East)
Inc.
E. Bradley Jones Prior to his retirement in 1984, Mr. Jones was 1990
Chairman and Chief Executive Officer of LTV
(71) Steel Company. He is a Director of TRW Inc.
(original equipment and replacement products),
Consolidated Rail Corporation, Birmingham Steel
Corporation, and RPM, Inc. (manufacturer of
chemical products), and he previously served
as a Director of NACCO Industries, Inc.
(mining and manufacturing, 1985-1995), Hyster-Yale
Materials Handling, Inc. (1985-1995), and
Cleveland-Cliffs Inc. (mining), and as a
Trustee of First Union Real Estate
Investments. In addition, he serves as a
Trustee of the Cleveland Clinic Foundation,
where he has also been a member of the
Executive Committee as well as Chairman of the
7
<PAGE>
Year of
Election or
Nominee (Age) Principal Occupation ** Appointment
- ------------- -------------------- -----------
Board and President, a Trustee and member of
the Executive Committee of University School
(Cleveland), and a Trustee of Cleveland Clinic
Florida.
Donald J. Kirk Executive-in-Residence (1995) at Columbia 1987
University Graduate School of Business and
(66) a financial consultant. From 1987 to
January 1995, Mr. Kirk was a Professor at
Columbia University Graduate School of
Business. Prior to 1987, he was Chairman of
the Financial Accounting Standards Board. Mr.
Kirk is a Director of General Re Corporation
(reinsurance), and he previously served as a
Director of Valuation Research Corp.
(appraisals and valuations, 1993-1995). In
addition, he serves as Chairman of the Board
of Directors of National Arts Stabilization
Inc., Chairman of the Board of Trustees of the
Greenwich Hospital Association, Director of
the Yale-New Haven Health Services Corp.
(1998), a Member of the Public Oversight Board
of the American Institute of Certified Public
Accountants' SEC Practice Section (1995), and
as a Public Governor of the National
Association of Securities Dealers, Inc.
(1996).
*Peter S. Lynch Vice Chairman and Director of FMR. Prior to May 1990
31, 1990, he was a Director of FMR and Executive
(56) Vice President of FMR (a position he held until
March 31, 1991); Vice President of Fidelity
Magellan Fund and FMR Growth Group Leader;
and Managing Director of FMR Corp. Mr. Lynch
was also Vice President of Fidelity Investments
Corporate Services (1991-1992). In addition,
he serves as a Trustee of Boston College,
Massachusetts Eye & Ear Infirmary, Historic
Deerfield (1989) and Society for the Preservation
of New England Antiquities, and as an Overseer of
the Museum of Fine Arts of Boston.
William O. McCoy Vice President of Finance for the University of 1997
North Carolina (16-school system, 1995). Prior to
(65) his retirement in December 1994, Mr. McCoy was
Vice Chairman of the Board of BellSouth Corporation
8
<PAGE>
Year of
Election or
Nominee (Age) Principal Occupation ** Appointment
- ------------- -------------------- -----------
(telecommunications, 1984) and President of
BellSouth Enterprises (1986). He is currently
a Director of Liberty Corporation (holding
company, 1984), Weeks Corporation of Atlanta
(real estate, 1994), Carolina Power and Light
Company (electric utility, 1996) and the Kenan
Transport Co. (1996). Previously, he was a
Director of First American Corporation (bank
holding company, 1979-1996). In addition, Mr.
McCoy serves as a member of the Board of
Visitors for the University of North Carolina
at Chapel Hill (1994) and for the Kenan-Flager
Business School (University of North Carolina
at Chapel Hill, 1988).
Gerald C. McDonough Chairman of G.M. Management Group (strategic 1989
advisory services). Mr. McDonough is a Director
(70) of York International Corp.(air conditioning
and refrigeration), Commercial Intertech Corp.
(hydraulic systems, building systems, and metal
products, 1992), CUNO, Inc. (liquid and
gas filtration products, 1996), and Associated
Estates Realty Corporation (a real estate investment
trust, 1993). Mr.McDonough served as a Director of
ACME-Cleveland Corp. (metal working,
telecommunications, and electronic products)
from 1987-1996 and Brush-Wellman Inc. (metal
refining) from 1983-1997.
Marvin L. Mann Chairman of the Board of Lexmark International, 1993
Inc. (office machines, 1991). Prior to 1991, he held
(65) the positions of Vice President of International
Business Machines Corporation ("IBM") and President
and General Manager of various IBM divisions and
subsidiaries. Mr. Mann is a Director of M.A.
Hanna Company (chemicals, 1993) and Imation Corp.
(imaging and information storage, 1997).
*Robert C. Pozen Senior Vice President, is also President and a 1997
Director of FMR (1997); and President and a
(52) Director of Fidelity Investments Money Management,
Inc. (1998), Fidelity Management & Research (U.K.)
9
<PAGE>
Year of
Election or
Nominee (Age) Principal Occupation ** Appointment
- ------------- -------------------- -----------
Inc. (1997), and Fidelity Management & Research
(Far East) Inc. (1997). Previously, Mr. Pozen
served as General Counsel, Managing Director,
and Senior Vice President of FMR Corp.
Thomas R. Williams President of The Wales Group, Inc. (management 1989
and financial advisory services). Prior to
(70) retiring in 1987, Mr. Williams served as Chairman
of the Board of First Wachovia Corporation
(bank holding company), and Chairman and Chief
Executive Officer of The First National Bank
of Atlanta and First Atlanta Corporation (bank
holding company). He is currently a Director
of ConAgra, Inc. (agricultural products),
Georgia Power Company (electric utility),
National Life Insurance Company of Vermont,
American Software, Inc., and AppleSouth, Inc.
(restaurants, 1992).
</TABLE>
** Except as otherwise indicated, each individual has held the office
shown or other offices in the same company for the last five years.
As of November 30, 1998, the nominees, Trustees and officers of the
Trust owned, in the aggregate, less than 1% of each fund's outstanding shares.
If elected, the Trustees will hold office without limit in time except
that (a) any Trustee may resign; (b) any Trustee may be removed by written
instrument, signed by at least two-thirds of the number of Trustees prior to
such removal; (c) any Trustee who requests to be retired or who has become
incapacitated by illness or injury may be retired by written instrument signed
by a majority of the other Trustees; and (d) a Trustee may be removed at any
Special Meeting of shareholders by a two-thirds vote of the outstanding voting
securities of the trust. In case a vacancy shall for any reason exist, the
remaining Trustees will fill such vacancy by appointing another Trustee, so long
as, immediately after such appointment, at least two-thirds of the Trustees have
been elected by shareholders. If, at any time, less than a majority of the
Trustees holding office has been elected by the shareholders, the Trustees then
in office will promptly call a shareholders' meeting for the purpose of electing
a Board of Trustees. Otherwise, there will normally be no meeting of
shareholders for the purpose of electing Trustees.
10
<PAGE>
The trust's Board, which is currently composed of three interested and
nine non-interested Trustees, met eleven times during the twelve months ended
April 30, 1998. It is expected that the Trustees will meet at least ten times a
year at regularly scheduled meetings.
The trust's Audit Committee is composed entirely of Trustees who are
not interested persons of the trust, FMR or its affiliates and normally meets
four times a year, or as required, prior to meetings of the Board of Trustees.
Currently, Messrs. Kirk (Chairman), Gates and McCoy, and Mrs. Davis are members
of the Committee. The committee oversees and monitors the trust's internal
control structure, its auditing function and its financial reporting process,
including the resolution of material reporting issues. The committee recommends
to the Board of Trustees the appointment of auditors for the trust. It reviews
audit plans, fees and other material arrangements in respect of the engagement
of auditors, including non-audit services to be performed. It reviews the
qualifications of key personnel involved in the foregoing activities. The
committee plays an oversight role in respect of the trust's investment
compliance procedures and the code of ethics. During the twelve months ended
April 30, 1998, the committee held four meetings.
The trust's Nominating and Administration Committee is currently
composed of Messrs. McDonough (Chairman), Jones and Williams. The committee
members confer periodically and hold meetings as required. The committee makes
nominations for independent trustees, and for membership on committees. The
committee periodically reviews procedures and policies of the Board of Trustees
and committees. It acts as the administrative committee under the Retirement
Plan for non-interested trustees who retired prior to December 30, 1996. It
monitors the performance of legal counsel employed by the trust and the
independent trustees. The committee in the first instance monitors compliance
with, and acts as the administrator of the provisions of the code of ethics
applicable to the independent trustees. During the twelve months ended April 30,
1998, the committee held no meetings. The Nominating and Administration
Committee will consider nominees recommended by shareholders. Recommendations
should be submitted to the committee in care of the Secretary of the Trust. The
trust does not have a compensation committee; such matters are considered by the
Nominating and Administration Committee.
The following table sets forth information describing the compensation
of each Trustee and Member of the Advisory Board of each fund for his or her
services for the fiscal year ended April 30, 1998, or calendar year ended
December 31, 1998, as applicable.
11
<PAGE>
<TABLE>
<CAPTION>
Compensation Table
AGGREGATE J. Gary Ralph Phyllis Robert Edward E. Donald Peter William Gerald Marvin Robert Thomas
COMPENSATION Burkhead F.Cox Burke M. C. Bradley J. S. O. C. L. C. R.
FROM A FUND -------- ----- Davis Gates Johnson Jones Kirk Lynch McCoy Mc- Mann Pozen Williams
**,# ----- ----- 3d** ----- ---- ** ----- Donough ---- ** --------
---- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment Grade $0 $614 $614 $626 $0 $614 $614 $0 $626 $766 $606 $0 $614
BondB
Short Term $0 $348 $348 $356 $0 $348 $348 $0 $356 $435 $344 $0 $348
BondB,C,D
Government IncomeB $0 $105 $105 $107 $0 $105 $105 $0 $107 $131 $104 $0 $105
High IncomeB $0 $896 $896 $912 $0 $896 $896 $0 $912 $1118 $884 $0 $896
Short-Intermediate $0 $28 $28 $29 $0 $28 $28 $0 $29 $35 $28 $0 $28
GovernmentB
TOTAL $0 $223,500 $220,500 $223,500 $0 $220,000 $226,500 $0 $223,500 $273,500 $220,500 $0 $223,500
COMPENSATION
FROM THE FUND
COMPLEX*, A
</TABLE>
* Information is for the calendar year ended December 31, 1998 for 237
funds in the complex.
** Interested Trustees of the funds and Mr. Burkhead are compensated by
FMR.
# J. Gary Burkhead served on the Board of Trustees through July 31, 1997.
Effective August 1, 1997, Mr. Burkhead serves as a Member of the
Advisory Board of the trust.
A Compensation figures include cash, amounts required to be deferred, and
may include amounts deferred at the election of Trustees. For the
calendar year ended December 31, 1998, the Trustees accrued required
deferred compensation from the funds as follows: Ralph F. Cox, $75,000;
Phyllis Burke Davis, $75,000; Robert M. Gates, $75,000; E. Bradley
Jones, $75,000; Donald J. Kirk, $75,000; William O. McCoy, $75,000;
Gerald C. McDonough, $87,500; Marvin L. Mann, $75,000; and Thomas R.
Williams, $75,000. Certain of the non-interested Trustees elected
voluntarily to defer a portion of their compensation as follows: Ralph
F. Cox, $55,039; William O. McCoy, $55,039; Marvin L. Mann, $55,039;
and Thomas R. Williams, $63,433.
B Compensation figures include cash and may include amounts required to
be deferred and amounts deferred at the election of Trustees.
C The following amounts are required to be deferred by each
non-interested Trustee, most of which is subject to vesting: Ralph F.
Cox, $164; Phyllis Burke Davis, $164; Robert M. Gates, $166; E. Bradley
Jones, $164; Donald J. Kirk, $164; William O. McCoy, $166; Gerald C.
McDonough, $192; Marvin L. Mann, $164; and Thomas R. Williams, $164.
D For the fiscal year ended April 30, 1998, certain of the non-interested
Trustees' aggregate compensation from the fund includes accrued
voluntary deferred compensation as follows: Ralph F. Cox, $138; William
O. McCoy, $41; Marvin L. Mann, $138; and Thomas R. Williams, $138.
12
<PAGE>
Under a deferred compensation plan adopted in September 1995 and
amended in November 1996 (the Plan), non-interested Trustees must defer receipt
of a portion of, and may elect to defer receipt of an additional portion of,
their annual fees. Amounts deferred under the Plan are subject to vesting and
are treated as though equivalent dollar amounts had been invested in shares of a
cross-section of Fidelity funds including funds in each major investment
discipline and representing a majority of Fidelity's assets under management
(the Reference Funds). The amounts ultimately received by the Trustees under the
Plan will be directly linked to the investment performance of the Reference
Funds. Deferral of fees in accordance with the Plan will have a negligible
effect on a fund's assets, liabilities, and net income per share, and will not
obligate a fund to retain the services of any Trustee or to pay any particular
level of compensation to the Trustee. A fund may invest in the Reference Funds
under the Plan without shareholder approval.
2. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS INDEPENDENT
ACCOUNTANTS OF THE FUNDS.
By a vote of the non-interested Trustees, the firm of
PricewaterhouseCoopers LLP has been selected as independent accountants for each
fund to sign or certify any financial statements of each fund required by any
law or regulation to be certified by an independent accountant and filed with
the Securities and Exchange Commission (SEC) or any state. Pursuant to the 1940
Act, such selection requires the ratification of shareholders. In addition, as
required by the 1940 Act, the vote of the Trustees is subject to the right of
each fund, by vote of a majority of its outstanding voting securities at any
meeting called for the purpose of voting on such action, to terminate such
employment without penalty. PricewaterhouseCoopers LLP has advised each fund
that it has no direct or material indirect ownership interest in each fund.
For the funds' most recently completed fiscal year, the firm of Coopers
& Lybrand L.L.P. acted as each fund's independent accountant. Effective July 1,
1998, Coopers & Lybrand L.L.P. and Price Waterhouse LLP combined their
businesses and practices and began doing business as PricewaterhouseCoopers LLP.
The independent accountants examine annual financial statements for the
funds and provide other audit and tax-related services. In recommending the
selection of each fund's accountants, the Audit Committee reviewed the nature
and scope of the services to be provided (including non-audit services) and
whether the performance of such services would affect the accountants'
independence. Representatives of PricewaterhouseCoopers LLP are not expected to
be present at the Meeting, but have been given the opportunity to make a
statement if they so desire and will be available should any matter arise
requiring their presence.
3. TO AUTHORIZE THE TRUSTEES TO ADOPT AN AMENDED AND RESTATED DECLARATION
OF TRUST.
The Board of Trustees has approved and recommends that the shareholders
of the trust authorize them to adopt and execute an Amended and Restated
Declaration of Trust for the trust and the funds of the trust in the form
attached to this Proxy Statement as Exhibit 1 (New Declaration of Trust). The
13
<PAGE>
attached New Declaration of Trust has been marked to show changes from the
trust's existing Declaration of Trust (Current Declaration of Trust). The New
Declaration of Trust is a more modern form of trust instrument for a
Massachusetts business trust, and, going forward, will be used as the standard
Declaration of Trust for all new Fidelity Massachusetts business trusts.
The New Declaration of Trust gives the Trustees more flexibility and,
subject to applicable requirements of the 1940 Act and Massachusetts law,
broader authority to act. This increased flexibility may allow the Trustees to
react more quickly to changes in competitive and regulatory conditions and, as a
consequence, may allow the funds to operate in a more efficient and economical
manner. Adoption of the New Declaration of Trust will not alter in any way the
Trustees' existing fiduciary obligations to act with due care and in the
shareholders' interests. Before utilizing any new flexibility that the New
Declaration of Trust may afford, the Trustees must first consider the
shareholders' interests and then act in accordance with such interests.
Adoption of the New Declaration of Trust will not result in any changes
in the funds' Trustees or officers or in the investment policies and shareholder
services described in the funds' current prospectuses.
Generally, a majority of the Trustees may amend the Current Declaration
of Trust when authorized by a "majority of the outstanding voting securities"
(as defined in the 1940 Act) of the trust. On October 16, 1997, the Trustees
approved the form of the New Declaration of Trust. On December 18, 1997, the
Board approved several additional changes to the form of the New Declaration of
Trust, which changes have been incorporated into the form attached to this Proxy
Statement. On September 17, 1998, the Board authorized the submission of the New
Declaration of Trust to the trust's shareholders for their authorization at this
Meeting.
The New Declaration of Trust amends the Current Declaration of Trust in
a number of significant ways. The following discussion summarizes some of the
more significant amendments to the Current Declaration of Trust effected by the
New Declaration of Trust.
IN ADDITION TO THE CHANGES DESCRIBED BELOW, THERE ARE OTHER SUBSTANTIVE
AND STYLISTIC DIFFERENCES BETWEEN THE NEW DECLARATION OF TRUST AND THE CURRENT
DECLARATION OF TRUST. THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE NEW DECLARATION OF TRUST ITSELF, WHICH IS ATTACHED AS EXHIBIT 1
TO THIS PROXY STATEMENT.
SIGNIFICANT CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
Reorganization or Termination of the Trust or Its Series. Unlike the
Current Declaration of Trust, the New Declaration of Trust generally permits the
Trustees, subject to applicable Federal and state law, to reorganize or
terminate the trust or any of its series. The Current Declaration of Trust
requires shareholder approval in order to reorganize or terminate the trust or
any of its series.
Under certain circumstances, it may not be in the shareholders'
interest to require a shareholder meeting to permit the trust or a fund to
reorganize into another entity. For example, in order to reduce the cost and
14
<PAGE>
scope of state regulatory constraints or to take advantage of a more favorable
tax treatment offered by another state, the Trustees may determine that it would
be in the shareholders' interests to reorganize a fund to domicile it in another
state or to change its legal form. Under the Current Declaration of Trust, the
Trustees cannot effectuate such a potentially beneficial reorganization without
first conducting a shareholder meeting and incurring the attendant costs and
delays. In contrast, the New Declaration of Trust gives the Trustees the
flexibility to reorganize the trust or any of its series and achieve potential
shareholder benefits without incurring the delay and potential costs of a proxy
solicitation. Such flexibility should help to assure that the trust and its
funds operate under the most appropriate form of organization.
Similarly, under certain circumstances, it may not be in the
shareholders' interest to require a shareholder meeting to permit the Trustees
to terminate a fund. For example, a fund may have insufficient assets to invest
effectively or excessively high expense levels due to operational needs. Under
such circumstances, absent viable alternatives, the Trustees may determine that
terminating the fund is in the shareholders' interest and the only appropriate
course of action. The process of obtaining shareholder approval of the fund's
termination may, however, make it more difficult to complete the fund's
liquidation and termination and, in general, will increase the costs associated
with the termination. In such a case, it may be in the shareholders' interest to
permit fund termination without incurring the costs and delays of a shareholder
meeting.
As discussed above, before allowing a trust or fund reorganization or
termination to proceed without shareholder approval, the Trustees have a
fiduciary responsibility to first determine that the proposed transaction is in
the shareholders' interest. Any exercise of the Trustees' increased authority
under the New Declaration of Trust is also subject to any applicable
requirements of the 1940 Act and Massachusetts law. Of course, in all cases, the
New Declaration of Trust would require that shareholders receive written
notification of any proposed transaction.
The New Declaration of Trust does not give the Trustees the authority
to merge a fund with another operating mutual fund or sell all of a fund's
assets to another operating mutual fund without first seeking shareholder
approval. Under the New Declaration of Trust, shareholder approval is still
required for these transactions.
Future Amendments of the Declaration of Trust. The New Declaration of
Trust permits the Trustees, with certain exceptions, to amend the Declaration of
Trust without shareholder approval. Under the New Declaration of Trust,
shareholders generally have the right to vote on any amendment affecting their
right to vote, on any amendment altering the maximum number of permitted
Trustees, on any amendment affecting the New Declaration of Trust's amendment
provisions, on any amendment required by law or the trust's registration
statement, and on any matter submitted to shareholders by the Trustees. The
Current Declaration of Trust, on the other hand, generally gives shareholders
the exclusive power to amend the Declaration of Trust. By allowing amendment of
the Declaration of Trust without shareholder approval, the New Declaration of
Trust gives the Trustees the necessary authority to react quickly to future
15
<PAGE>
contingencies. As mentioned above, such increased authority remains subordinate
to the Trustees' continuing fiduciary obligations to act with due care and in
the shareholders' interest.
Master Feeder Authority. The New Declaration of Trust clarifies that
the Trustees may authorize the investment of all of a fund's assets in another
open-end investment company (Master Feeder Fund Structure). The Current
Declaration of Trust does not specifically provide the Trustees the ability to
authorize the Master Feeder Fund Structure. The purpose of a Master Feeder Fund
Structure is to achieve operational efficiencies by consolidating portfolio
management while maintaining different distribution and servicing structures. In
order to implement a Master Feeder Fund Structure, both the Declaration of Trust
and the funds' policies must permit the structure. Currently, each fund's
policies do not allow for such investments. Proposal 4 on page __ seeks the
approval of each fund's shareholders to adopt a fundamental investment policy to
permit investment in another open-end investment company with substantially the
same investment objective and policies.
A number of mutual funds have developed so called Master Feeder Fund
Structures under which several "feeder" funds invest all of their assets in a
single pooled investment, or "master" fund. For example, an institutional equity
fund with a high initial minimum investment amount for large investors might
pool its investments with an equity fund with low minimums designed for retail
investors. This structure allows several feeder funds with substantially the
same objective, but different distribution and servicing features to combine
their investments and manage them as one master fund instead of managing them
separately. The feeder funds combine their investments by investing all of their
assets in one master fund. (Each feeder fund invested in a single master fund
retains its own characteristics, but is able to achieve operational efficiencies
by investing together with the other feeder funds in the Master Feeder Fund
Structure.)
FMR and the Board of Trustees continually review methods of structuring
mutual funds to take maximum advantage of potential efficiencies. While neither
FMR nor the Trustees have determined that a fund should invest in a master fund,
the Trustees believe it could be in the best interest of each fund to adopt such
a structure at a future date. If approved, the New Declaration of Trust would
provide the Trustees with the power to authorize a fund to invest all of its
assets in a single open-end investment company. The Trustees will authorize such
a transaction only if a Master Feeder Fund Structure is permitted under a fund's
investment policies (see Proposal 4), if they determine that a Master Feeder
Fund Structure is in the best interest of the fund, and if, upon advice of
counsel, they determine that the investment will not have material adverse tax
consequences to the fund or its shareholders. The Trustees will specifically
consider the impact, if any, on fees paid by the fund as a result of adopting a
Master Feeder Fund Structure.
Shareholder Notification of Trustee Appointment. The New Declaration of
Trust generally provides that, in the case of a vacancy on the Board of
Trustees, the remaining Trustees shall fill the vacancy by appointing a person
they, in their discretion, see fit, consistent with the limitations of the 1940
Act. Section 16 of the 1940 Act states that a vacancy may be filled by the
Trustees if, after filling the vacancy, at least two-thirds of the Trustees then
holding office were elected by the holders of the outstanding voting securities
of the trust. It also states that if at any time less than 50% of the Trustees
were elected by shareholders, a shareholder meeting must be called within 60
16
<PAGE>
days for the purposes of electing Trustees to fill the existing vacancies.
Trustees may also appoint a Trustee in anticipation of a current Trustee's
retirement or resignation or in the event of an increase in the number of
Trustees. The Current Declaration of Trust requires that within three months of
a Trustee appointment, notification of such appointment be mailed to each
shareholder of the trust. The New Declaration of Trust eliminates this
notification requirement.
Notifying a trust's shareholders in the event of an appointment of a
Trustee is not required by any federal or state law. Such notification to all
shareholders of a trust may be costly. If the New Declaration of Trust is
approved, shareholders would normally be notified of future Trustee appointments
in the next financial report for the fund following the appointment.
OTHER CHANGES EFFECTED BY THE NEW DECLARATION OF TRUST.
In addition to the significant changes above, the New Declaration of
Trust modifies the Current Declaration of Trust in a number of important ways,
including the following:
1. The New Declaration of Trust modifies the Current Declaration of
Trust to allow FMR and the trust, on behalf of each fund, to amend the fund's
respective Management Contract subject to the provisions of Section 15 of the
1940 Act, as modified or interpreted by the SEC. In contrast, the Current
Declaration of Trust explicitly requires the vote of a majority of the
outstanding voting securities of a fund to authorize all such amendments. A
corresponding change is also proposed for certain of the funds' Management
Contracts. For more information on this topic generally, see "Modification of
Management Contract Amendment Provisions" on pages __ and __.
2. The New Declaration of Trust clarifies that the Trustees may impose
other fees (for example, purchase fees) in addition to sales charges upon
investment in a fund and clarifies that deferred sales charges and other fees
(for example, redemption fees) may be imposed upon redemption of a fund's
shares.
3. The New Declaration of Trust confirms and clarifies various existing
Trustee powers. For example, the New Declaration of Trust clarifies that the
Trustees, in addition to banks and trust companies, may employ as fund
custodians companies that are members of a national securities exchange or other
entities permitted under the 1940 Act; delegate authority to investment advisers
and other agents; adopt and offer dividend reinvestment and related plans;
operate and carry on the business of an investment company; and interpret the
investment policies, practices, and limitations of any fund.
4. The New Declaration of Trust clarifies that no shareholder of a
trust series shall have a claim on the assets of another series and further
clarifies that, by virtue of investing in a fund, a shareholder is deemed to
have assented to and agreed to be bound by the terms of the New Declaration of
Trust.
5. The New Declaration of Trust deletes various technical and/or
antiquated requirements from the Current Declaration of Trust, including
17
<PAGE>
existing requirements that a Trustee vacancy be deemed to occur when a Trustee
is absent from his or her state of residence, that Trustee vacancies must be
filled within six calendar months, and that portfolio securities be held
pursuant to safeguards prescribed by usual Massachusetts practice.
6. As a general matter, the New Declaration of Trust modifies the
Current Declaration of Trust to incorporate appropriate references to classes of
shares.
7. Lastly, the New Declaration of Trust generally expands various 1940
Act defined terms to encompass SEC modifications and interpretations. Specific
references to discrete sections of the 1940 Act that are contained in the New
Declaration of Trust have likewise been expanded to include SEC modifications
and interpretations.
CONCLUSION. The Board of Trustees has concluded that the proposed
adoption of the New Declaration of Trust is in the best interests of the trust's
shareholders. Accordingly, the Trustees unanimously recommend that the
shareholders vote FOR the proposal to authorize them to adopt and execute the
New Declaration of Trust. If the proposal is not approved, the Current
Declaration of Trust will remain unchanged and in effect.
4. TO ADOPT A NEW FUNDAMENTAL INVESTMENT POLICY FOR EACH FUND PERMITTING
THE FUND TO INVEST ALL OF ITS ASSETS IN ANOTHER OPEN-END INVESTMENT
COMPANY MANAGED BY FMR OR AN AFFILIATE WITH SUBSTANTIALLY THE SAME
INVESTMENT OBJECTIVE AND POLICIES.
The Board of Trustees has approved, and recommends that shareholders of
each fund approve, the adoption of a new fundamental investment policy that
would permit the fund to invest all of its assets in another open-end investment
company managed by FMR or an affiliate with substantially the same investment
objective and policies. Adoption of the policy would allow a fund to participate
in a so-called "Master Feeder Fund" organizational format (Master Feeder Fund
Structure).
Participation in a Master Feeder Fund Structure would allow a fund to
combine its assets with other funds having substantially the same investment
objective and policies, but differing distribution or servicing arrangements. By
combining its assets in a central "Master Fund" with other participating "Feeder
Funds," a fund would be able to maintain its unique distribution and servicing
structure while potentially achieving operational efficiencies through the
consolidation of portfolio management. For example, if FMR managed three funds
all with the same investment objective and policies, a Master Feeder Fund
Structure would allow FMR to manage one combined fund (rather than three), but
still offer three distinct products, each having different servicing features
and pricing (e.g., one distinct product for retail investors, a second for
institutional investors and a third for foreign investors). The purpose of a
Master Feeder Fund Structure would be to allow FMR to manage only one fund in
each investment discipline (Master Fund), but still be able to offer that
investment discipline with a variety of different servicing features and pricing
(Feeder Funds). The Master Feeder Fund Structure is explained in more detail
below. A diagram comparing a typical "stand alone" fund structure to a Master
Feeder Fund Structure is attached to this Proxy Statement as Exhibit 2.
18
<PAGE>
If the proposal is approved by shareholders, the Trustees will only
authorize investing a fund's assets in a Master Fund if they determine that a
Master Feeder Fund Structure is in the best interests of the fund's
shareholders, and if, upon advice of counsel, they determine that the investment
will not have material adverse tax consequences to the fund or its shareholders.
THE MASTER FEEDER FUND STRUCTURE. The term "Master Feeder Fund
Structure" refers to a two-tiered arrangement in which typically one or more
mutual funds with substantially identical investment objectives (the Feeder
Funds) combine their assets by investing in a single investment company having
the same investment objective (the Master Fund). The Feeder Funds sell their
shares to the public and invest all of their assets in shares of the Master
Fund. In turn, the Master Fund, in accordance with its and the Feeder Funds'
common investment objective, invests its assets in appropriate portfolio
securities (e.g., stocks, bonds, or money market instruments). The Master Fund
is not offered to the public: it sells its shares only to the Feeder Funds. The
individual Feeder Funds are generally sold through different distribution
channels to discrete targeted markets, such as retail investors, institutional
investors or foreign investors. Administrative and service features will vary
among Feeder Funds depending upon the level of service sought by the fund's
investors. Simply stated, the Master Feeder Fund Structure consolidates
portfolio management and related functions at the Master Fund (or bottom tier)
level and segregates marketing and distribution to the Feeder Fund (or top tier)
level.
The Master Feeder Fund Structure may offer certain advantages over more
traditional "stand alone" funds. For example, participating Feeder Funds may
achieve economies of scale by sharing among a greater number of investment
dollars fixed expenses of portfolio management and fund administration. Feeder
Funds may also be able to achieve greater diversification by means of a larger
portfolio of securities than could be achieved by individual funds. In short,
the Master Feeder Fund Structure gives participating Feeder Funds the ability to
tailor services and fees for particular market segments while providing the
economies of scale available to a larger fund.
REASON FOR THE PROPOSAL. FMR and the Board of Trustees continually
review methods of structuring mutual funds to take advantage of potential
efficiencies. While neither the Board nor FMR has determined that a fund should
invest in a Master Fund, the Trustees believe it could be in the best interests
of a fund to adopt such a structure at a future date.
At present, certain of a fund's fundamental investment policies and
limitations would prevent the fund from investing all of its assets in a Master
Fund and would require a vote of shareholders before the fund could participate
in a Master Feeder Fund Structure. These policies include a fund's limitations
on concentration, diversification, and underwriting. To avoid the costs
associated with a subsequent shareholder meeting, the Trustees recommend that
shareholders approve the proposal to permit each fund to invest its assets in a
single Master Fund, without a further vote of shareholders. If shareholders
approve this proposal, the above-mentioned restrictive policies would no longer
preclude a fund's investment in a Master Fund.
To allow possible future implementation of a Master Feeder Fund
Structure, an amendment to the Declaration of Trust is also proposed. Proposal 3
19
<PAGE>
requests approval for the adoption of an amended and restated Declaration of
Trust (New Declaration of Trust) that would allow the Trustees to authorize each
fund's conversion to a Master Feeder Fund Structure when permitted by its
policies. This proposal would add a fundamental policy for each fund that
permits the Master Feeder Fund Structure.
DISCUSSION. As discussed above, FMR may manage a number of mutual funds
with similar investment objectives, policies, and limitations, but with
different features and services. Were these comparable funds to combine their
assets, operational efficiencies could be achieved, offering the opportunity to
reduce costs. Similarly, FMR anticipates that a Master Feeder Fund Structure
would facilitate the introduction of new Fidelity mutual funds, increasing the
investment options available to shareholders.
A fund's method of operation and shareholder services would not be
materially affected by its investment in a Master Fund, except that the assets
of the fund would be managed as part of a larger fund. Were a fund to invest all
of its assets in a Master Fund, it would hold only a single investment security
(i.e., shares of the Master Fund). The Master Fund, in turn, would directly
invest in individual securities pursuant to its investment objective (which
would be identical to the fund's investment objective). The Master Fund would be
managed by FMR or an affiliate, such as Fidelity Investments Money Management,
Inc. in the case of a money market fund.
The Trustees would retain the right to withdraw a fund's investments
from a Master Fund at any time and would do so if the Master Fund's investment
objective and policies were no longer appropriate for the fund. The fund would
then resume investing directly in individual securities as it does currently.
If, as a Feeder Fund, a fund is asked to vote at a shareholder meeting
of the Master Fund, the fund, if required by applicable law or its policies,
would hold a meeting of its shareholders to vote on the matters to be considered
at the Master Fund shareholder meeting. A fund would cast its votes at the
Master Fund meeting in the same proportion as the fund's shareholders voted at
their meeting.
At present, the Trustees have not considered any specific proposal to
authorize a Master Feeder Fund Structure. As mentioned, the Trustees will
authorize investing a fund's assets in a Master Fund only if they determine that
a Master Feeder Fund Structure is in the best interests of the fund's
shareholders and if, upon advice of counsel, they determine that the investment
will not have material adverse tax consequences to the fund or its shareholders.
In determining whether to invest in a Master Fund, the Trustees will consider,
among other things, the opportunity to reduce costs and to achieve operational
efficiencies. The Trustees will not authorize investment in a Master Fund if
doing so would materially increase costs (including fees) to shareholders.
FMR may benefit from the use of a Master Feeder Fund Structure if
overall assets under management are increased (since FMR's fees are based on
assets). Also, FMR's expenses of providing investment and other services to a
fund may be reduced. If a fund's investment in a Master Fund were to reduce
20
<PAGE>
FMR's expenses materially, the Trustees would consider whether a reduction in
FMR's management fee would be appropriate if and when a Master Feeder Fund
Structure is implemented.
PROPOSED FUNDAMENTAL POLICY. To allow each fund to invest in a Master
Fund at a future date, the Trustees recommend that each fund adopt the following
fundamental policy:
"The fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by Fidelity Management &
Research Company or an affiliate or successor with substantially the
same fundamental investment objective, policies, and limitations as the
fund."
If the proposal is adopted, the Trustees intend to adopt a
non-fundamental investment limitation for each fund that states:
"The fund does not currently intend to invest all of its assets in the
securities of a single open-end management investment company managed
by Fidelity Management & Research Company or an affiliate or successor
with substantially the same fundamental investment objective, policies,
and limitations as the fund."
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit each fund and its shareholders. The Trustees recommend voting FOR the
proposal. Upon shareholder approval, the fundamental limitation will become
effective when disclosure is revised to reflect the changes. If the proposal is
not approved by the shareholders of a fund, that fund's current fundamental
investment policies will remain unchanged with respect to potential investment
in Master Funds.
5. TO APPROVE AN AMENDED MANAGEMENT CONTRACT FOR FIDELITY INVESTMENT GRADE
BOND FUND AND FIDELITY SHORT-TERM BOND FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the Trust or of FMR (the Independent Trustees), has approved, and
recommends that shareholders of each fund approve, a proposal to adopt an
amended management contract with FMR (the Amended Contract). The Amended
Contract modifies the management fee that FMR receives from a fund to provide
for lower fees when FMR's assets under management exceed certain levels. In
addition, the Amended Contract allows FMR and the trust, on behalf of a fund, to
modify the Management Contract subject to the requirements of the 1940 Act. The
existing Management Contract (Present Contract) currently requires the vote of a
majority of a fund's outstanding voting securities to authorize all amendments.
See "Modification of Management Contract Amendment Provisions" on page __ for
more details. THE AMENDED CONTRACT WILL RESULT IN A MANAGEMENT FEE THAT IS THE
SAME AS, OR LOWER THAN, THE FEE PAYABLE UNDER THE PRESENT CONTRACT. (For
information on FMR, see the section entitled "Activities and Management of FMR"
on page __.)
21
<PAGE>
PROPOSED AMENDMENTS TO THE PRESENT MANAGEMENT CONTRACT. A copy of the
form of Amended Contract, marked to indicate the proposed amendments, is
supplied as Exhibit 3 on page __ . Except for the modifications discussed above,
it is substantially identical to the Present Contract. (For a detailed
discussion of each fund's Present Contract, refer to the section entitled
"Present Management Contracts of Fidelity Investment Grade Bond Fund and
Fidelity Short-Term Bond Fund" beginning on page __.) If approved by
shareholders, the Amended Contract will take effect on May 1, 1999 (or, if
later, the first day of the first month following approval) and will remain in
effect through June 30, 1999 and thereafter, but only as long as its continuance
is approved at least annually by (i) the vote, cast in person at a meeting
called for the purpose, of a majority of the Independent Trustees and (ii) the
vote of either a majority of the Trustees or a majority of the outstanding
shares of a fund. If the Amended Contract is not approved, the Present Contract
will continue in effect through June 30, 1999, and thereafter only as long as
its continuance is approved at least annually as above.
The management fee is an annual percentage of a fund's average net
assets (the management fee rate), calculated and paid monthly. The management
fee rate is the sum of two components: a Group Fee Rate, which varies according
to assets under management by FMR, and a fixed Individual Fund Fee Rate. The
Amended Contract modifies the Group Fee Rate by providing for lower fee rates if
FMR's assets under management remain above $156 billion.
MODIFICATION TO GROUP FEE RATE. The Group Fee Rate varies based upon
the monthly average of the aggregate net assets of all registered investment
companies having management contracts with FMR (assets under management by FMR).
For example, as assets under management by FMR increase, the Group Fee Rate
declines. The Amended Contract would not change the group fee calculation for
assets under management by FMR of $156 billion or less. Above $156 billion in
assets under FMR's management, the Group Fee Rate declines under both the
Present Contract and the Amended Contact, but under the Amended Contract, it
declines faster. Group Fee Rates that are lower than those contained in a fund's
Present Contract have been voluntarily implemented by FMR on November 1, 1993,
August 1, 1994, and January 1, 1996.
The Group Fee Rate is calculated according to a graduated schedule
providing for different rates for different levels of assets under management by
FMR. The rate at which the Group Fee Rate declines is determined by fee
"breakpoints" that provide for lower fee rates when assets increase. The Amended
Contract adds eleven new fee breakpoints for assets under FMR's management above
$156 billion as illustrated in the following table. (For an explanation of how
the Group Fee Rate is used to calculate the management fee, see the section
entitled "Present Management Contracts of Fidelity Investment Grade Bond Fund
and Fidelity Short-Term Bond Fund" beginning on page __.)
22
<PAGE>
GROUP FEE RATE BREAKPOINTS
PRESENT CONTRACT AMENDED CONTRACT
---------------- ----------------
Average Group Present Average Group Amended
Assets Contract* Assets Contract
($ billions) --------- ($ billions) --------
------------ ------------
Over 174 .1400% 156 - 192 .1400%
192 - 228 .1350%
228 - 264 .1300%
264 - 300 .1275%
300 - 336 .1250%
336 - 372 .1225%
372 - 408 .1200%
408 - 444 .1175%
444 - 480 .1150%
480 - 516 .1125%
Over 516 .1100%
The result at various levels of group net assets is illustrated by the table
below.
EFFECTIVE ANNUAL GROUP FEE RATES
Group Net Present Amended
Assets Contract* Contract
($ billions) --------- --------
------------
150 .1736% .1736%
200 .1658% .1652%
250 .1606% .1587%
300 .1572% .1536%
350 .1547% .1494%
400 .1529% .1459%
450 .1515% .1427%
500 .1503% .1399%
550 .1494% .1372%
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1, 1996.
Average assets under FMR's management for November 1998 were
approximately $643 billion.
COMPARISON OF MANAGEMENT FEES. For the month ended November 1998,
average assets under management by FMR were approximately $643 billion. Each
fund's management fee rate under the Amended Contract for the month ended
November 30, 1998, would have been .4333%, compared to .4480% under the Present
Contract. The management fee rate remains the same under both the Present
Contract and the Amended Contract until assets under management by FMR exceed
$156 billion, at which point the management fee rate under the Amended Contract
begins to decline relative to the Present Contract.
The following chart compares each fund's management fee as calculated
under the terms of the Present Contract for the fiscal year ended April 30, 1998
to the management fee each fund would have incurred if the Amended Contract had
been in effect.
23
<PAGE>
Present Contract Amended Contract
---------------- ----------------
Management Management Percentage
Fee* Fee Difference
--- --- ----------
Fidelity Investment Grade $7,275,768 $7,078,821 (2.7%)
Bond Fund
Fidelity Short-Term Bond $3,968,228 $3,862,104 (2.7%)
Fund
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1, 1996.
The following chart compares each fund's management fee under the terms
of the Present Contract for the twelve month period ended November 30, 1998 to
the management fee each fund would have incurred if the Amended Contract had
been in effect.
Present Contract Amended Contract
---------------- ----------------
Management Management Percentage
Fee* Fee Difference
--- --- ----------
Fidelity Investment Grade $8,511,126 $8,249,447 (3.1%)
Bond Fund
Fidelity Short-Term Bond $3,788,506 $3,672,556 (3.1%)
Fund
* Does not reflect voluntary adoption of extended group fee rate
schedules by FMR on November 1, 1993, August 1, 1994, and January 1, 1996.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the Trust, on behalf of a fund, to amend the Management
Contract subject to the provisions of Section 15 of the 1940 Act, as modified or
interpreted by the Securities and Exchange Commission. In contrast, the Present
Contract explicitly requires the vote of a majority of the outstanding voting
securities of a fund to authorize all amendments. Generally, the proposed
modification to the Present Contract's amendment provisions will allow FMR and
the Trust, on behalf of a fund, to amend the Management Contract without
shareholder vote if the 1940 Act permits them to do so. For example, under
current interpretations of Section 15 of the 1940 Act, the Amended Contract
would give FMR and the Trust the ability to amend the Management Contract to
immediately reflect a management fee decrease without the delay of having to
first conduct a proxy solicitation. In short, the proposed modification gives
FMR and the Trust added flexibility to amend the Management Contract subject to
1940 Act constraints. Of course, any future amendments to the Management
Contract would require the approval of a fund's Board of Trustees.
MATTERS CONSIDERED BY THE BOARD
24
<PAGE>
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board of
Trustees meets eleven times a year. The Board of Trustees, including the
Independent Trustees, believe that matters bearing on the appropriateness of
each fund's management fees are considered at most, if not all, of their
meetings. While the full Board of Trustees or the Independent Trustees, as
appropriate, act on all major matters, a significant portion of the activities
of the Board of Trustees (including certain of those described herein) are
conducted through committees. The Independent Trustees meet frequently in
executive session and are advised by independent legal counsel selected by the
Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of each fund, including all of the Independent
Trustees, on September 17, 1998. The Board of Trustees considered and approved
the modifications to the Group Fee Rate schedule during the two month periods
from November to December 1995, June to July 1994, and September to October
1993. The Board of Trustees received materials relating to the Amended Contract
in advance of the meeting at which the Amended Contract was considered, and had
the opportunity to ask questions and request further information in connection
with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings the Trustees received materials specifically relating to the
Amended Contract. These materials included (i) information on the investment
performance of each fund, a peer group of funds and an appropriate index or
combination of indices, (ii) sales and redemption data in respect of each fund,
(iii) the economic outlook and the general investment outlook in the markets in
which each fund invests, and (iv) notable changes in each fund's investments.
The Board of Trustees and the Independent Trustees also consider periodically
other material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of each fund's shares, (3) the
procedures employed to determine the value of each fund's assets, (4) the
allocation of each fund's brokerage, if any, including allocations to brokers
affiliated with FMR, (5) FMR's management of the relationships with each fund's
custodian and subcustodians, (6) the resources devoted to and the record of
compliance with each fund's investment policies and restrictions and with
policies on personal securities transactions, and (7) the nature, cost and
character of non-investment management services provided by FMR and its
affiliates.
In response to questions raised by the Independent Trustees, additional
information was furnished by FMR including, among other items, information on
and analysis of (a) the overall organization of FMR, (b) the choice of
performance indices and benchmarks, (c) the composition of peer groups of funds,
(d) transfer agency and bookkeeping fees paid to affiliates of FMR, (e)
investment performance, (f) investment management staffing, (g) the potential
for achieving further economies of scale, (h) operating expenses paid to third
parties, and (i) the information furnished to investors, including each fund's
shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as all-important or
controlling, and the following summary does not detail all the matters
25
<PAGE>
considered. Matters considered by the Board of Trustees and the Independent
Trustees in connection with their approval of the Amended Contract include the
following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustees considered whether each fund has operated within its
investment objective and its record of compliance with its investment
restrictions. They also reviewed monthly each fund's investment performance as
well as the performance of a peer group of mutual funds, and the performance of
an appropriate index or combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees review at least annually the background of each fund's portfolio
manager and each fund's investment objective and discipline. The Independent
Trustees have also had discussions with senior management of FMR responsible for
investment operations and the senior management of Fidelity's fixed income
group. Among other things they considered the size, education and experience of
FMR's investment staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory and
management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent of
administrative and shareholder services performed by FMR and affiliated
companies, both under the Present Contract and the Amended Contract and under
separate agreements covering transfer agency functions and pricing, bookkeeping
and securities lending services, if any. The Board of Trustees and the
Independent Trustees have also considered the nature and extent of FMR's
supervision of third party service providers, principally custodians and
subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees considered
each fund's expense ratio and expense ratios of a peer group of funds. They also
considered the amount and nature of fees paid by shareholders.
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of the
Fidelity funds, including each fund. This consideration included an extensive
review of FMR's methodology in allocating its costs to the management of each
fund. The Board of Trustees and the Independent Trustees have concluded that the
cost allocation methodology employed by FMR has a reasonable basis and is
appropriate in light of all of the circumstances. They considered the profits
realized by FMR in connection with the operation of each fund and whether the
amount of profit is a fair entrepreneurial profit for the management of each
fund. They also considered the profits realized from non-fund businesses which
may benefit from or be related to each fund's business. The Board of Trustees
and the Independent Trustees also considered FMR's profit margins in comparison
with available industry data, both accounting for and ignoring marketing
expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent Trustees
considered whether there have been economies of scale in respect of the
management of the Fidelity funds, whether the Fidelity funds (including each
fund) have appropriately benefitted from any economies of scale, and whether
26
<PAGE>
there is potential for realization of any further economies of scale. The Board
of Trustees and the Independent Trustees have concluded that FMR's mutual fund
business presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and FMR in an
appropriate manner. The Independent Trustees have also concluded that the
existing group fee structure should be continued but determined that it would be
appropriate to change the group fee structure as proposed herein.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by each fund and
each fund's shareholders for services provided by FMR and its affiliates,
including fees for services like transfer agency, fund accounting and direct
shareholder services. They also considered the allocation of fund brokerage to
brokers affiliated with FMR and the receipt of sales loads and payments under
Rule 12b-1 plans in respect of certain of the Fidelity funds. The Board of
Trustees and the Independent Trustees also considered the revenues and
profitability of FMR businesses other than its mutual fund business, including
FMR's retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing, real estate,
international research and investment funds, and others. The Board of Trustees
and the Independent Trustees considered the intangible benefits that accrue to
FMR and its affiliates by virtue of their relationship with each fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of investing in a
fund that is part of a large family of funds offering a variety of investment
disciplines and providing for a large variety of fund and shareholder services.
With regard to the proposed modification to the Present Contract's amendment
provisions, the Board of Trustees and the Independent Trustees considered the
benefit to shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the delays and
potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded (i) that
the existing management fee structure is fair and reasonable and (ii) that the
proposed modifications to the management fee structure, that is the reduction of
the Group Fee Rate schedule and the proposed modification to the Present
Contract's amendment provisions, are in the best interest of each fund's
shareholders. The Board of Trustees, including the Independent Trustees, voted
to approve the submission of the Amended Contract to shareholders of each fund
and recommends that shareholders of each fund vote FOR the Amended Contract. If
approved, the Amended Contract will take effect on the first day of the first
month following shareholder approval.
6. TO APPROVE AN AMENDED MANAGEMENT CONTRACT, INCLUDING A MANAGEMENT FEE
STRUCTURE CHANGE, FOR FIDELITY HIGH INCOME FUND.
The Board of Trustees, including the Trustees who are not "interested
persons" of the trust or of FMR (the Independent Trustees), has approved, and
27
<PAGE>
recommends that shareholders of the fund approve, a proposal to adopt an amended
management contract with FMR (the Amended Contract). The Amended Contract
changes the fund's current "all inclusive" management fee arrangement to a
"group fee" arrangement that is standard for other Fidelity bond funds. The
change in the fund's management fee structure is discussed in more detail below.
In addition, the Amended Contract allows FMR and the trust, on behalf of the
fund, to modify the Management Contract subject to the requirements of the 1940
Act. The existing Management Contract currently requires the vote of a majority
of the fund's outstanding voting securities to authorize all amendments. See
"Modification of Management Contract Amendment Provisions" on page __ for more
details.
MODIFICATION OF MANAGEMENT FEE STRUCTURE. The proposed management fee
structure differs significantly from the fund's current management fee
structure. Under the terms of the fund's existing management contract (Present
Contract), the fund pays an all-inclusive management fee to FMR that covers
substantially all fund expenses. Specifically, under the Present Contract, FMR
pays the fund's operating expenses, with limited exceptions. In contrast, under
the terms of the Amended Contract, the fund would pay its management fee and
other expenses separately. FMR would no longer pay the fund's other expenses.
If approved, the proposed group fee structure will result in a lower
management fee. Under the proposed group fee structure, the fund's total
operating expense ratio may, however, exceed its current rate of 0.80%. If the
Amended Contract is approved, FMR has voluntarily agreed to limit the fund's
total operating expense ratio to 0.80% of the fund's average net assets through
December 31, 2000. See "Comparison of Management Fees and Total Expenses" on
page __ for more detailed information on the financial effects of changing to
the proposed group fee structure.
The fund's current management fee is an annual percentage of the fund's
average net assets and is calculated and paid monthly. Under the Present
Contract, the fund pays FMR a management fee at an annual rate of 0.80% of the
fund's average daily net assets. Under the terms of the Present Contract, FMR
not only provides the fund with investment advisory and research services, but
also pays all of the fund's expenses, with the exception of fees and expenses of
all Trustees of the trust who are not "interested persons" of the trust or FMR;
interest on borrowings; taxes; brokerage fees and commissions; and such
non-recurring expenses as may arise, including costs of any litigation to which
the fund may be a party, and any obligation it may have to indemnify the
officers and Trustees with respect to litigation. The management fee that the
fund pays FMR is reduced by an amount equal to the fees and expenses paid by the
fund to the non-interested Trustees.
The Amended Contract would replace the fund's existing all-inclusive
management fee structure with a group fee structure that is standard for other
28
<PAGE>
Fidelity bond funds. Under the terms of the Amended Contract, the fund would pay
a management fee as well as its other expenses.
Under the Amended Contract, the fund's management fee would be
calculated by adding a Group Fee Rate to an Individual Fund Fee Rate and
multiplying the result by the fund's average net assets. The Group Fee Rate
varies based upon the monthly average of the net assets of all registered
investment companies having management contracts with FMR (assets under
management by FMR). For example, as assets under management by FMR increase, the
Group Fee Rate declines. The Individual Fund Fee Rate is a fixed rate specific
to the fund. Under the Amended Contract, the fund's Individual Fund Fee Rate
would equal 0.45%.
The fund's proposed Group Fee Rate would be calculated according to the
graduated schedule below. The schedule provides for different fee rates for
different levels of assets under management by FMR. As illustrated in the table,
the rate at which the Group Fee Rate declines is determined by fee "breakpoints"
that provide for lower fee rates when the total assets managed by FMR increase.
GROUP FEE RATE SCHEDULE
Average Group Annualized
Assets Rate
------ ----
0 - $3 billion .3700%
3 - 6 .3400
6 - 9 .3100
9 - 12 .2800
12 - 15 .2500
15 - 18 .2200
18 - 21 .2000
21 - 24 .1900
24 - 30 .1800
30 - 36 .1750
36 - 42 .1700
42 - 48 .1650
48 - 66 .1600
66 - 84 .1550
84 - 120 .1500
120 - 156 .1450
156 - 192 .1400
192 - 228 .1350
228 - 264 .1300
264 - 300 .1275
300 - 336 .1250
336 - 372 .1225
372 - 408 .1200
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
29
<PAGE>
Average assets under management by FMR for November 1998 were
approximately $643 billion.
Under the Amended Contract, in addition to the management fee, the fund
will pay all of its other operating expenses, including (i) interest and taxes;
(ii) brokerage commissions and other costs in connection with the purchase or
sale of securities and other investment instruments; (iii) fees and expenses of
the Trustees other than those who are "interested persons" of the trust or FMR;
(iv) legal and audit expenses; (v) custodian, registrar and transfer agent fees
and expenses; (vi) fees and expenses related to the registration and
qualification of the trust and the fund's shares for distribution under state
and federal securities laws; (vii) expenses of printing and mailing reports and
notices and proxy material to shareholders; (viii) all other expenses incidental
to holding meetings of shareholders, including proxy solicitations; (ix) a pro
rata share, based on relative net assets of the fund and other registered
investment companies having Advisory and Service or Management Contracts with
FMR, of 50% of insurance premiums for fidelity and other coverage; (x) its
proportionate share of association membership dues; (xi) expenses of typesetting
for printing prospectuses and statements of additional information and
supplements thereto; (xii) expenses of printing and mailing prospectuses and
statements of additional information and supplements thereto sent to existing
shareholders; and (xiii) such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings to which the
fund is a party and the legal obligation which the fund may have to indemnify
the Trustees and officers with respect thereto.
Lastly, under the fund's current all-inclusive management fee
arrangement, shareholders currently have the right to vote on any expense
increases over 0.80% of average net assets. Under the Amended Contract,
shareholders would also have the right to vote on any increases in FMR's
management fee; however, because the management fee would not be all-inclusive,
shareholders would not have the right to vote on other expense increases.
COMPARISON OF MANAGEMENT FEES AND TOTAL EXPENSES. As indicated below,
if the Amended Contract is approved, the fund's management fee will decrease;
although the fund's total operating expense ratio may increase. If the Amended
Contract is approved, FMR has voluntarily agreed to limit the fund's total
operating expense ratio to 0.80% of its average net assets through December 31,
2000 (excluding interest, taxes, brokerage commissions and extraordinary
expenses). After December 31, 2000, the fund's total operating expense ratio
could increase and could exceed the fund's current 0.80% all-inclusive
management fee. At the level of assets under management by FMR for November 1998
($643 billion), changing from the fund's current 0.80% all-inclusive management
fee rate to the proposed group fee structure (without any expense reimbursement)
would result in an estimated total operating expense ratio for the fund of
0.74%.
The following chart compares the fund's management fee under the terms
of the Present Contract for the fiscal year ended April 30, 1998 to the
management fee that the fund would have incurred under the Amended Contract if
it had been in effect during that period.
30
<PAGE>
Present Contract Amended Contract
Management Fee* Management Fee* Percentage Difference*
-------------- -------------- ---------------------
$19,320,542 $14,179,595 (26.6%)
The following chart compares the fund's management fee under the terms
of the Present Contract for the twelve month period ended November 30, 1998 to
the management fee that the fund would have incurred under the Amended Contract
if it had been in effect during that period.
Present Contract Amended Contract
Management Fee* Management Fee* Percentage Difference*
-------------- -------------- ---------------------
$23,080,536 $16,868,966 (26.9%)
*Under the Present Contract, FMR pays substantially all fund expenses
from the 0.80% management fee it receives from the fund. Under the Amended
Contract, FMR is not responsible for paying the fund's expenses; the fund pays
its operating expenses separately from the management fee. See "Modification of
Management Fee Structure" on page __ for more details.
COMPARATIVE EXPENSE TABLE
-------------------------
The following table provides data concerning the fund's management fees
and expenses as a percentage of average net assets for the fiscal year ended
April 30, 1998 under the Present Contract and if the Amended Contract had been
in effect during the same period.
The following figures are based on historical expenses adjusted to
reflect current fees and are calculated as a percentage of average net assets.
31
<PAGE>
Present Contract* Amended Contract*
----------------- ----------------
Management Fee 0.80% 0.59%
Rule 12b-1 Fee none none
Other Expenses 0.00% 0.16%
Total Operating Expenses 0.80% 0.75%
*Under the Present Contract, FMR pays substantially all fund expenses
from the 0.80% management fee it receives from the fund. Under the Amended
Contract, FMR is not responsible for paying the fund's expenses; the fund pays
its operating expenses separately from the management fee. See "Modification of
Management Fee Structure" on page __ for more details.
EXAMPLE: The following illustrates the expenses on a $1,000 investment under the
fees and expenses stated above, assuming (1) 5% annual return and (2) redemption
at the end of each time period:
1 Year 3 Years 5 Years 10 Years
Present Contract $8 $26 $44 $99
Amended Contract $8 $25 $43 $95
The purpose of this example and the table is to assist investors in
understanding the various costs and expenses of investing in shares of the fund.
The example above should not be considered a representation of past or future
expenses of the fund. Actual expenses may vary from year to year and may be
higher or lower than those shown above.
MODIFICATION OF MANAGEMENT CONTRACT AMENDMENT PROVISIONS. The Amended
Contract allows FMR and the trust, on behalf of the fund, to amend the
Management Contract subject to the provisions of Section 15 of the 1940 Act, as
modified or interpreted by the Securities and Exchange Commission. In contrast,
the Present Contract explicitly requires the vote of a majority of the
outstanding voting securities of the fund to authorize all amendments.
Generally, the proposed modification to the Present Contract's amendment
provisions will allow FMR and the trust, on behalf of the fund, to amend the
Management Contract without shareholder vote if the 1940 Act permits them to do
so. For example, under current interpretations of Section 15 of the 1940 Act,
the Amended Contract would give FMR and the trust the ability to amend the
Management Contract to immediately reflect a management fee decrease without the
delay of having to first conduct a proxy solicitation. In short, the proposed
32
<PAGE>
modification gives FMR and the trust added flexibility to amend the Management
Contract subject to 1940 Act constraints. Of course, any future amendments to
the Management Contract would require the approval of the fund's Board of
Trustees.
EFFECTIVE DATE OF AMENDED CONTRACT. If approved by shareholders, the
Amended Contract will take effect on May 1, 1999 (or, if later, the first day of
the first month following approval) and will remain in effect through June 30,
1999 and thereafter, but only as long as its continuance is approved at least
annually by (i) the vote, cast in person at a meeting called for the purpose, of
a majority of the Independent Trustees and (ii) the vote of either a majority of
the Trustees or a majority of the outstanding shares of the fund. If the Amended
Contract is not approved, the Present Contract will continue in effect through
June 30, 1999, and thereafter only as long as its continuance is approved at
least annually as above. A copy of the form of Amended Contract, marked to
indicate the proposed amendments, is supplied as Exhibit 4 on page __. Except
for the material modifications discussed in this proposal, the Amended Contract
is substantially the same as the Present Contract. (For a detailed discussion of
the fund's Present Contract, refer to the section entitled "Present Management
Contract of Fidelity High Income Fund" beginning on page __.)
MATTERS CONSIDERED BY THE BOARD
The mutual funds for which the members of the Board of Trustees serve
as Trustees are referred to herein as the "Fidelity funds." The Board of
Trustees meets eleven times a year. The Board of Trustees, including the
Independent Trustees, believe that matters bearing on the appropriateness of the
fund's management fees are considered at most, if not all, of their meetings.
While the full Board of Trustees or the Independent Trustees, as appropriate,
act on all major matters, a significant portion of the activities of the Board
of Trustees (including certain of those described herein) are conducted through
committees. The Independent Trustees meet frequently in executive session and
are advised by independent legal counsel selected by the Independent Trustees.
The proposal to present the Amended Contract to shareholders was
approved by the Board of Trustees of the fund, including all of the Independent
Trustees, on September 17, 1998. The Board of Trustees received materials
relating to the Amended Contract in advance of the meeting at which the Amended
Contract was considered, and had the opportunity to ask questions and request
further information in connection with such consideration.
INFORMATION RECEIVED BY THE INDEPENDENT TRUSTEES. In connection with
their meetings, the Trustees received materials specifically relating to the
Amended Contract. These materials included (i) information on the investment
performance of the fund, a peer group of funds, and an appropriate index or
combination of indices, (ii) sales and redemption data in respect of the fund,
(iii) the economic outlook and the general investment outlook in the markets in
which the fund invests, and (iv) notable changes in the fund's investments. The
Board of Trustees and the Independent Trustees also consider periodically other
material facts such as (1) FMR's results and financial condition, (2)
arrangements in respect of the distribution of the fund's shares, (3) the
procedures employed to determine the value of the fund's assets, (4) the
allocation of the fund's brokerage, if any, including allocations to brokers
affiliated with FMR, (5) FMR's management of the relationships with the fund's
33
<PAGE>
custodian and subcustodians, (6) the resources devoted to and the record of
compliance with the fund's investment policies and restrictions and with
policies on personal securities transactions, and (7) the nature, cost and
character of non-investment management services provided by FMR and its
affiliates.
In response to questions raised by the Independent Trustees, additional
information was furnished by FMR including, among other items, information on
and analysis of (a) the overall organization of FMR, (b) the choice of
performance indices and benchmarks, (c) the composition of peer groups of funds,
(d) transfer agency and bookkeeping fees paid to affiliates of FMR, (e)
investment performance, (f) investment management staffing, (g) the potential
for achieving further economies of scale, (h) operating expenses paid to third
parties, and (i) the information furnished to investors, including the fund's
shareholders.
In considering the Amended Contract, the Board of Trustees and the
Independent Trustees did not identify any single factor as all-important or
controlling, and the following summary does not detail all the matters
considered. Matters considered by the Board of Trustees and the Independent
Trustees in connection with their approval of the Amended Contract include the
following:
INVESTMENT COMPLIANCE AND PERFORMANCE. The Board of Trustees and the
Independent Trustee considered whether the fund has operated within its
investment objective and its record of compliance with its investment
restrictions. They also reviewed monthly the fund's investment performance as
well as the performance of a peer group of mutual funds, and the performance of
an appropriate index or combination of indices.
FMR'S PERSONNEL AND METHODS. The Board of Trustees and the Independent
Trustees review at least annually the background of the fund's portfolio manager
and the fund's investment objective and discipline. The Independent Trustees
have also had discussions with senior management of FMR responsible for
investment operations and the senior management of Fidelity's fixed-income
group. Among other things they considered the size, education and experience of
FMR's investment staff, its use of technology, and FMR's approach to recruiting,
training and retaining portfolio managers and other research, advisory and
management personnel.
NATURE AND QUALITY OF OTHER SERVICES. The Board of Trustees and the
Independent Trustees considered the nature, quality, cost and extent of
administrative and shareholder services performed by FMR and affiliated
companies, both under the Present Contract and the Amended Contract and under
separate agreements covering transfer agency functions and pricing, bookkeeping
and securities lending services, if any. The Board of Trustees and the
Independent Trustees have also considered the nature and extent of FMR's
supervision of third party service providers, principally custodians and
subcustodians.
EXPENSES. The Board of Trustees and the Independent Trustees considered
the fund's expense ratio and expense ratios of a peer group of funds. They also
considered the amount and nature of fees paid by shareholders.
34
<PAGE>
PROFITABILITY. The Board of Trustees and the Independent Trustees
considered the level of FMR's profits in respect of the management of the
Fidelity funds, including the fund. This consideration included an extensive
review of FMR's methodology in allocating its costs to the management of the
fund. The Board of Trustees and the Independent Trustees have concluded that the
cost allocation methodology employed by FMR has a reasonable basis and is
appropriate in light of all of the circumstances. They considered the profits
realized by FMR in connection with the operation of the fund and whether the
amount of profit is a fair entrepreneurial profit for the management of the
fund. They also considered the profits realized from non-fund businesses which
may benefit from or be related to the fund's business. The Board of Trustees and
the Independent Trustees also considered FMR's profit margins in comparison with
available industry data, both accounting for and ignoring marketing expenses.
ECONOMIES OF SCALE. The Board of Trustees and the Independent Trustees
considered whether there have been economies of scale in respect of the
management of the Fidelity funds, whether the Fidelity funds (including the
fund) have appropriately benefited from any economies of scale, and whether
there is potential for realization of any further economies of scale. The Board
of Trustees and the Independent Trustees have concluded that FMR's mutual fund
business presents some limited opportunities to realize economies of scale and
that these economies are being shared between fund shareholders and FMR in an
appropriate manner.
OTHER BENEFITS TO FMR. The Board of Trustees and the Independent
Trustees also considered the character and amount of fees paid by the fund and
the fund's shareholders for services provided by FMR and its affiliates,
including fees for services like transfer agency, fund accounting and direct
shareholder services. They also considered the allocation of fund brokerage to
brokers affiliated with FMR and the receipt of sales loads and payments under
Rule 12b-1 plans in respect of certain of the Fidelity funds. The Board of
Trustees and the Independent Trustees also considered the revenues and
profitability of FMR businesses other than its mutual fund business, including
FMR's retail brokerage, correspondent brokerage, capital markets, trust,
investment advisory, pension record keeping, insurance, publishing, real estate,
international research and investment funds, and others. The Board of Trustees
and the Independent Trustees considered the intangible benefits that accrue to
FMR and its affiliates by virtue of their relationship with the fund.
OTHER BENEFITS TO SHAREHOLDERS. The Board of Trustees and the
Independent Trustees considered the benefit to shareholders of investing in a
fund that is part of a large family of funds offering a variety of investment
disciplines and providing for a large variety of fund and shareholder services.
With regard to the proposed modification to the Present Contract's amendment
provisions, the Board of Trustees and the Independent Trustees considered the
benefit to shareholders of FMR's and the trust's increased flexibility (within
1940 Act constraints) to amend the Management Contract without the delays and
potential costs of a proxy solicitation.
CONCLUSION. Based on their evaluation of all material factors and
assisted by the advice of independent counsel, the Trustees concluded that the
proposed modifications to the management fee structure, that is the
35
<PAGE>
implementation of the Group Fee Rate structure and the proposed modification to
the Present Contract's amendment provisions, are in the best interest of the
fund's shareholders. The Board of Trustees, including the Independent Trustees,
voted to approve the submission of the Amended Contract to shareholders of the
fund and recommends that shareholders of the fund vote FOR the Amended Contract.
If approved, the Amended Contract will take effect on the first day of the first
month following shareholder approval.
7. TO APPROVE AN AMENDED SUB-ADVISORY AGREEMENT WITH FMR U.K. FOR FIDELITY
INVESTMENT GRADE BOND FUND, FIDELITY SHORT-TERM BOND FUND, AND FIDELITY
HIGH INCOME FUND.
In conjunction with its portfolio management responsibilities on behalf
of each fund, FMR has entered into sub-advisory agreements with affiliates whose
offices are geographically dispersed around the world. To strengthen these
relationships, the Board of Trustees proposes that shareholders of each fund
approve an amended sub-advisory agreement (the Proposed Agreement) between FMR
U.K. and FMR on behalf of each fund to replace FMR's existing agreement with FMR
U.K. The Proposed Agreement would allow FMR not only to receive investment
advice and research services from FMR U.K., but also would permit FMR to grant
FMR U.K. investment management authority if FMR believes it would be beneficial
to each fund and its shareholders. In addition, the Proposed Agreement would
allow FMR, FMR U.K., and the trust, on behalf of each fund, to modify the
Proposed Agreement subject to the requirements of the 1940 Act. The existing
sub-advisory agreement currently in effect with FMR U.K. requires the vote of a
majority of each fund's outstanding voting securities to authorize all
amendments. Because FMR pays all of FMR U.K.'s fees, the Proposed Agreement
would not affect the fees paid by each fund to FMR.
On September 17, 1998, the Board of Trustees agreed to submit the
Proposed Agreement to shareholders of each fund pursuant to a unanimous vote of
both the full Board of Trustees and those Trustees who were not "interested
persons" of the trust or FMR. FMR provided substantial information to the
Trustees to assist them in their deliberations. The Trustees determined that
allowing FMR to grant investment management authority to FMR U.K. would provide
FMR increased flexibility in the assignment of portfolio managers and give each
fund access to managers located abroad who may have more specialized expertise
with respect to local companies and markets. Additionally, the Trustees believe
that each fund and its shareholders may benefit from giving FMR, through FMR
U.K., the ability to execute portfolio transactions from points in Europe that
are physically closer to foreign issuers and the primary markets in which their
securities are traded. Increasing FMR's proximity to foreign markets should
enable each fund to participate more readily in full trading sessions on foreign
exchanges, and to react more quickly to changing market conditions. With regard
to the proposed modification to the existing sub-advisory agreement's amendment
provisions, the Trustees considered the benefit to shareholders of FMR's, FMR
U.K.'s, and the trust's increased flexibility (within 1940 Act constraints) to
amend the agreement without the delays and potential costs of a proxy
solicitation.
If approved by shareholders, the Proposed Agreement will replace the
sub-advisory agreement currently in effect with FMR U.K. with respect to each
36
<PAGE>
fund (the Current Agreement). The Current Agreement, dated November 1, 1989,
(Fidelity Investment Grade Bond Fund and Fidelity Short-Term Bond Fund) and
November 1, 1993 (Fidelity High Income Fund) was approved by each fund's
shareholders on October 18, 1989 (Fidelity Investment Grade Bond Fund and
Fidelity Short-Term Bond Fund) and October 20, 1993 (Fidelity High Income Fund).
A copy of the form of Proposed Agreement is attached to this Proxy Statement as
Exhibit 5.
FMR U.K., with its principal office in London, England, is a
wholly-owned subsidiary of FMR established in 1986 to provide investment
research to FMR with respect to foreign securities. This research complements
other research on foreign securities produced by FMR's U.S.-based research
analysts and portfolio managers, or obtained from broker-dealers or other
sources.
FMR U.K. may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as investment
adviser, and to other clients. Currently, FMR U.K.'s only client other than FMR
is Fidelity International Limited (FIL), an affiliate of FMR organized under the
laws of Bermuda. FIL provides investment advisory services to non-U.S.
investment companies and institutional investors investing in securities of
issuers throughout the world. Edward C. Johnson 3d, President and a Trustee of
the trust, is Chairman and a Director of FMR U.K., Chairman and a Director of
FIL, and a principal stockholder of both FIL and FMR. For more information on
FMR U.K., see the section entitled "Activities and Management of FMR U.K. and
FMR Far East" on page __.
Under the Current Agreement, FMR U.K. acts as an investment consultant
to FMR and supplies FMR with investment research information and portfolio
management advice as FMR reasonably requests on behalf of each fund. FMR U.K.
provides investment advice and research services with respect to issuers located
outside of the United States, focusing primarily on companies based in Europe.
Under the Current Agreement with FMR U.K., FMR, NOT EACH FUND, pays FMR U.K.'s
fee equal to 110% of its costs incurred in connection with the agreement.
For the fiscal year ended April 30, 1998, no fees were paid by FMR to
FMR U.K. on behalf of the funds.
Under the Current Agreement, FMR U.K. has no authority to make
investment decisions on behalf of the funds. Under the Proposed Agreement, FMR
would continue to receive investment advice from FMR U.K., but it could also
grant investment management authority to FMR U.K. with respect to all or a
portion of each fund's assets. If FMR U.K. were to exercise investment
management authority on behalf of the fund, it would be required, subject to the
supervision of FMR, to direct the investments of the fund in accordance with the
fund's investment objective, policies, and limitations as provided in each
fund's Prospectus or other governing instruments and such other limitations as
each fund may impose by notice in writing to FMR or FMR U.K. If FMR grants
investment management authority to FMR U.K. with respect to all or a portion of
the fund's assets, FMR U.K. would be authorized to buy or sell stocks, bonds,
and other securities for the fund subject to the overall supervision of FMR and
the Board of Trustees. In addition, the Proposed Agreement would authorize FMR
to delegate other investment management services to FMR U.K., including, but not
37
<PAGE>
limited to, currency management services (including buying and selling currency
options and entering into currency forward and futures contracts on behalf of
each fund), other transactions in futures contracts and options, and borrowing
or lending portfolio securities. If any of these investment management services
were delegated, FMR U.K. would continue to be subject to the control and
direction of FMR and the Board of Trustees and to be bound by the investment
objective, policies, and limitations of each fund.
The Proposed Agreement would also allow FMR, FMR U.K., and the trust,
on behalf of each fund, to amend the Proposed Agreement subject to the
provisions of Section 15 of the 1940 Act, as modified or interpreted by the
Securities and Exchange Commission. In contrast, the Current Agreement
explicitly requires the vote of a majority of the outstanding voting securities
of each fund to authorize all amendments. Generally, the proposed modification
to the Current Agreement's amendment provisions would allow amendment of the
sub-advisory agreement without shareholder vote only if the 1940 Act so permits.
In short, the proposed modification gives FMR, FMR U.K., and the trust added
flexibility to amend the sub-advisory agreement subject to 1940 Act constraints.
Of course, any future amendments to the sub-advisory agreement would require the
approval of the Board of Trustees.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY EACH
FUND. The fees paid by FMR to FMR U.K. for investment advice as described above
would remain unchanged. However, to the extent that FMR granted investment
management authority to FMR U.K., FMR would pay FMR U.K. 50% of its monthly
management fee with respect to the average net assets managed on a discretionary
basis by FMR U.K. for investment management and portfolio execution services.
If approved by shareholders, the Proposed Agreement would take effect
on the first day of the first month following approval and would continue in
force until June 30, 1999 and from year to year thereafter, but only as long as
its continuance was approved at least annually by (i) the vote, cast in person
at a meeting called for the purpose, of a majority of those Trustees who are not
"interested persons" of the trust or FMR and (ii) the vote of either a majority
of the Trustees or a majority of the outstanding shares of each fund.
The Proposed Agreement could be transferred to a successor of FMR U.K.
without resulting in its termination and without shareholder approval, as long
as the transfer did not constitute an assignment under applicable securities
regulations. The Proposed Agreement would be terminable on 60 days' written
notice by either party to the agreement and the Proposed Agreement would
terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit each fund and its shareholders. The Trustees recommend voting FOR the
proposal. With respect to each fund, if the Proposed Agreement is approved by
shareholders, the Proposed Agreement will take effect on the first day of the
first month following approval. With respect to each fund, if the Proposed
Agreement is not approved, FMR will continue to manage that fund under its
current Management Contract and the Current Agreement with FMR U.K. will remain
in effect.
38
<PAGE>
8. TO APPROVE AN AMENDED SUB-ADVISORY AGREEMENT WITH FMR FAR EAST FOR
FIDELITY INVESTMENT GRADE BOND FUND, FIDELITY SHORT-TERM BOND FUND, AND
FIDELITY HIGH INCOME FUND.
In conjunction with its portfolio management responsibilities on behalf
of each fund, FMR has entered into sub-advisory agreements with affiliates whose
offices are geographically dispersed around the world. To strengthen these
relationships, the Board of Trustees proposes that shareholders of each fund
approve an amended sub-advisory agreement (the Proposed Agreement) between FMR
Far East and FMR on behalf of each fund to replace FMR's existing agreement with
FMR Far East. The Proposed Agreement would allow FMR not only to receive
investment advice and research services from FMR Far East, but also would permit
FMR to grant FMR Far East investment management authority if FMR believes it
would be beneficial to each fund and its shareholders. In addition, the Proposed
Agreement would allow FMR, FMR Far East, and the trust, on behalf of each fund,
to modify the Proposed Agreement subject to the requirements of the 1940 Act.
The existing sub-advisory agreement currently in effect with FMR Far East
requires the vote of a majority of each fund's outstanding voting securities to
authorize all amendments. Because FMR pays all of FMR Far East's fees, the
Proposed Agreement would not affect the fees paid by each fund to FMR.
On September 17, 1998, the Board of Trustees agreed to submit the
Proposed Agreement to shareholders of each fund pursuant to a unanimous vote of
both the full Board of Trustees and those Trustees who were not "interested
persons" of the trust or FMR. FMR provided substantial information to the
Trustees to assist them in their deliberations. The Trustees determined that
allowing FMR to grant investment management authority to FMR Far East would
provide FMR increased flexibility in the assignment of portfolio managers and
give each fund access to managers located abroad who may have more specialized
expertise with respect to local companies and markets. Additionally, the
Trustees believe that each fund and its shareholders may benefit from giving
FMR, through FMR Far East, the ability to execute portfolio transactions from
points in the Far East that are physically closer to foreign issuers and the
primary markets in which their securities are traded. Increasing FMR's proximity
to foreign markets should enable each fund to participate more readily in full
trading sessions on foreign exchanges and to react more quickly to changing
market conditions. With regard to the proposed modification to the existing
sub-advisory agreement's amendment provisions, the Trustees considered the
benefit to shareholders of FMR's, FMR Far East's, and the trust's increased
flexibility (within 1940 Act constraints) to amend the agreement without the
delays and potential costs of a proxy solicitation.
If approved by shareholders, the Proposed Agreement will replace the
sub-advisory agreement currently in effect with FMR Far East with respect to
each fund (the Current Agreement). The Current Agreement, dated November 1, 1989
(Fidelity Investment Grade Bond Fund and Fidelity Short-Term Bond Fund) and
November 1, 1993 (Fidelity High Income Fund), was approved by each fund's
shareholders on October 18, 1989 (Fidelity Investment Grade Bond Fund and
Fidelity Short-Term Bond Fund) and October 20, 1993 (Fidelity High Income Fund).
A copy of the form of Proposed Agreement is attached to this Proxy Statement as
Exhibit 6.
39
<PAGE>
FMR Far East, with its principal office in Tokyo, Japan, is a
wholly-owned subsidiary of FMR established in 1986 to provide investment
research to FMR with respect to foreign securities. This research complements
other research on foreign securities produced by FMR's U.S.-based research
analysts and portfolio managers, or obtained from broker-dealers or other
sources.
FMR Far East may also provide investment advisory services to FMR with
respect to other investment companies for which FMR serves as investment
adviser, and to other clients. Currently, FMR Far East's only client other than
FMR is Fidelity International Limited (FIL), an affiliate of FMR organized under
the laws of Bermuda. FIL provides investment advisory services to non-U.S.
investment companies and institutional investors investing in securities of
issuers throughout the world. Edward C. Johnson 3d, President and a Trustee of
the trust, is Chairman and a Director of FMR Far East, Chairman and a Director
of FIL, and a principal stockholder of both FIL and FMR. For more information on
FMR Far East, see the section entitled "Activities and Management of FMR U.K.
and FMR Far East" on page __.
Under the Current Agreement, FMR Far East acts as an investment
consultant to FMR and supplies FMR with investment research information and
portfolio management advice as FMR reasonably requests on behalf of each fund.
FMR Far East provides investment advice and research services with respect to
issuers located outside of the United States, focusing primarily on companies
based in the Far East. Under the current Agreement with FMR Far East, FMR, NOT
EACH FUND, pays FMR Far East's fee equal to 105% of its costs incurred in
connection with the agreement.
For the fiscal year ended April 30, 1998, no fees were paid by FMR to
FMR Far East on behalf of the funds.
Under the Current Agreement, FMR Far East has no authority to make
investment decisions on behalf of the funds. Under the Proposed Agreement, FMR
would continue to receive investment advice from FMR Far East, but it could also
grant investment management authority to FMR Far East with respect to all or a
portion of each fund's assets. If FMR Far East were to exercise investment
management authority on behalf of the fund, it would be required, subject to the
supervision of FMR, to direct the investments of the fund in accordance with the
fund's investment objective, policies, and limitations as provided in each
fund's Prospectus or other governing instruments and such other limitations as
each fund may impose by notice in writing to FMR or FMR Far East. If FMR grants
investment management authority to FMR Far East with respect to all or a portion
of the fund's assets, FMR Far East would be authorized to buy or sell stocks,
bonds, and other securities for the fund subject to the overall supervision of
FMR and the Board of Trustees. In addition, the Proposed Agreement would
authorize FMR to delegate other investment management services to FMR Far East,
including, but not limited to, currency management services (including buying
and selling currency options and entering into currency forward and futures
contracts on behalf of each fund), other transactions in futures contracts and
options, and borrowing or lending portfolio securities. If any of these
investment management services were delegated, FMR Far East would continue to be
40
<PAGE>
subject to the control and direction of FMR and the Board of Trustees and to be
bound by the investment objective, policies, and limitations of each fund.
The Proposed Agreement would also allow FMR, FMR Far East, and the
trust, on behalf of each fund, to amend the Proposed Agreement subject to the
provisions of Section 15 of the 1940 Act, as modified or interpreted by the
Securities and Exchange Commission. In contrast, the Current Agreement
explicitly requires the vote of a majority of the outstanding voting securities
of each fund to authorize all amendments. Generally, the proposed modification
to the Current Agreement's amendment provisions would allow amendment of the
sub-advisory agreement without shareholder vote only if the 1940 Act so permits.
In short, the proposed modification gives FMR, FMR Far East, and the trust added
flexibility to amend the sub-advisory agreement subject to 1940 Act constraints.
Of course, any future amendments to the sub-advisory agreement would require the
approval of the Board of Trustees.
THE PROPOSED AGREEMENT WOULD NOT INCREASE THE FEES PAID TO FMR BY EACH
FUND. The fees paid by FMR to FMR Far East for investment advice as described
above would remain unchanged. However, to the extent that FMR granted investment
management authority to FMR Far East, FMR would pay FMR Far East 50% of its
monthly management fee with respect to the average net assets managed on a
discretionary basis by FMR Far East for investment management and portfolio
execution services.
If approved by shareholders, the Proposed Agreement would take effect
on the first day of the first month following approval and would continue in
force until June 30, 1999 and from year to year thereafter, but only as long as
its continuance was approved at least annually by (i) the vote, cast in person
at a meeting called for the purpose, of a majority of those Trustees who are not
"interested persons" of the trust or FMR and (ii) the vote of either a majority
of the Trustees or a majority of the outstanding shares of each fund.
The Proposed Agreement could be transferred to a successor of FMR Far
East without resulting in its termination and without shareholder approval, as
long as the transfer did not constitute an assignment under applicable
securities regulations. The Proposed Agreement would be terminable on 60 days'
written notice by either party to the agreement and the Proposed Agreement would
terminate automatically in the event of its assignment.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit each fund and its shareholders. The Trustees recommend voting FOR the
proposal. With respect to each fund, if the Proposed Agreement is approved by
shareholders, the Proposed Agreement will take effect on the first day of the
first month following approval. With respect to each fund, if the Proposed
Agreement is not approved, FMR will continue to manage that fund under its
current Management Contract and the Current Agreement with FMR Far East will
remain in effect.
9. TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF FIDELITY INVESTMENT
GRADE BOND FUND.
41
<PAGE>
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal that would eliminate certain fundamental investment
policies from the fund's investment objective. The elimination of these policies
will allow the fund to more clearly communicate its investment objective and
strategies in conformity with the requirements of revised Form N-1A (the form
used by open-end investment companies like the fund to register under the
Investment Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to have any material affect on the
investment strategies or performance of the fund.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment objective,
including certain related investment policies describing investment strategies,
currently reads as follows:
"The fund seeks to provide a high rate of income, consistent with
reasonable risk, by investing in a broad range of fixed-income
securities. In addition, the fund seeks to protect your capital. Where
appropriate, the fund will take advantage of opportunities to realize
capital appreciation."
The fund's objective is fundamental, which means that it cannot be
modified without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment
objective would read as follows (additional language is ((underlined)) and
deleted language is [bracketed]):
"The fund seeks [to provide] a high [rate] ((level)) of ((current))
income [, consistent with reasonable risk, by investing in a broad
range of fixed-income securities. In addition, the fund seeks to
protect your capital. Where appropriate, the fund will take advantage
of opportunities to realize capital appreciation]."
As indicated above, if the proposal is approved, the fundamental
investment policies currently incorporated into the fund's fundamental
investment objective would be eliminated from the objective. The eliminated
policies are currently described elsewhere in the fund's disclosure. Eliminating
these policies from the fund's investment objective will allow the fund to
comply with the requirements of revised Form N-1A for concise, understandable
descriptions of its investment objective and policies, and will allow the fund
to more clearly communicate its investment objective and strategies to
shareholders. Eliminating these policies from the fund's investment objective is
not expected to materially affect the investment strategies or performance of
the fund.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will benefit the
fund and its shareholders. The Trustees recommend voting FOR the proposal. If
approved by shareholders, the elimination of the policies will become effective
when disclosure is revised to reflect the changes. If the proposal is not
approved by the fund's shareholders, the fund's current fundamental investment
policies will remain unchanged.
42
<PAGE>
10. TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF SHORT-TERM BOND
FUND.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal that would eliminate certain fundamental investment
policies from the fund's investment objective. The elimination of these policies
will allow the fund to more clearly communicate its investment objective and
strategies in conformity with the requirements of revised Form N-1A (the form
used by open-end investment companies like the fund to register under the
Investment Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to have any material affect on the
investment strategies or performance of the fund.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment objective,
including certain related investment policies describing investment strategies,
currently reads as follows:
"The fund seeks to obtain a high level of current income, consistent
with preservation of capital, by investing primarily in a broad range
of fixed-income securities."
The fund's objective is fundamental, which means that it cannot be
modified without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment
objective would read as follows (deleted language is [bracketed]):
"The fund seeks to obtain a high level of current income[,] consistent
with preservation of capital[, by investing primarily in a broad range
of fixed-income securities]."
As indicated above, if the proposal is approved, the fundamental
investment policies currently incorporated into the fund's fundamental
investment objective (i.e., "by investing primarily in a broad range of
fixed-income securities") would be eliminated from the objective. The eliminated
policies are currently described elsewhere in the fund's disclosure. Eliminating
these policies from the fund's investment objective will allow the fund to
comply with the requirements of revised Form N-1A for concise, understandable
descriptions of its investment objective and policies, and will allow the fund
to more clearly communicate its investment objective and strategies to
shareholders. Eliminating these policies from the fund's investment objective is
not expected to materially affect the investment strategies or performance of
the fund.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will benefit the
fund and its shareholders. The Trustees recommend voting FOR the proposal. If
approved by shareholders, the elimination of the policies will become effective
when disclosure is revised to reflect the changes. If the proposal is not
approved by the fund's shareholders, the fund's current fundamental investment
policies will remain unchanged.
43
<PAGE>
11. TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF SPARTAN GOVERNMENT
INCOME FUND.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal that would eliminate certain fundamental investment
policies from the fund's investment objective. The elimination of these policies
will allow the fund to more clearly communicate its investment objective and
strategies in conformity with the requirements of revised Form N-1A (the form
used by open-end investment companies like the fund to register under the
Investment Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to have any material affect on the
investment strategies or performance of the fund.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment objective,
including certain related investment policies describing investment strategies,
currently reads as follows:
"The fund seeks a high level of current income by investing principally
in U.S. Government securities (securities issued or guaranteed by the
U.S. Government or its agencies or instrumentalities)."
The fund's objective is fundamental, which means that it cannot be
modified without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment
objective would read as follows (deleted language is [bracketed]):
"The fund seeks a high level of current income [by investing
principally in U.S. Government securities (securities issued or
guaranteed by the U.S. Government or its agencies or
instrumentalities)]."
As indicated above, if the proposal is approved, the fundamental
investment policies currently incorporated into the fund's fundamental
investment objective (i.e., "by investing principally in U.S. Government
securities (securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities)") would be eliminated from the objective. The
eliminated policies are currently described elsewhere in the fund's disclosure.
Eliminating these policies from the fund's investment objective will allow the
fund to comply with the requirements of revised Form N-1A for concise,
understandable descriptions of its investment objective and policies, and will
allow the fund to more clearly communicate its investment objective and
strategies to shareholders. Eliminating these policies from the fund's
investment objective is not expected to materially affect the investment
strategies or performance of the fund.
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will benefit the
fund and its shareholders. The Trustees recommend voting FOR the proposal. If
approved by shareholders, the elimination of the policies will become effective
44
<PAGE>
when disclosure is revised to reflect the changes. If the proposal is not
approved by the fund's shareholders, the fund's current fundamental investment
policies will remain unchanged.
12. TO ELIMINATE CERTAIN FUNDAMENTAL INVESTMENT POLICIES OF FIDELITY HIGH INCOME
FUND.
The Board of Trustees has approved, and recommends that shareholders of
the fund approve, a proposal that would eliminate certain fundamental investment
policies from the fund's investment objective. The elimination of these policies
will allow the fund to more clearly communicate its investment objective and
strategies in conformity with the requirements of revised Form N-1A (the form
used by open-end investment companies like the fund to register under the
Investment Company Act of 1940 and the Securities Act of 1933). The elimination
of these investment policies is not expected to have any material affect on the
investment strategies or performance of the fund.
DISCUSSION OF PROPOSED MODIFICATIONS. The fund's investment objective,
including certain related investment policies describing investment strategies,
currently reads as follows:
"The fund seeks a high level of current income by investing primarily
in high-yielding, fixed-income securities. In pursuing this objective,
growth of capital may also be considered when consistent with the
fund's objective of seeking high current income."
The fund's objective is fundamental, which means that it cannot be
modified without a vote of the fund's shareholders.
If the proposal is approved, the fund's fundamental investment
objective would read as follows (additional language is ((underlined)) and
deleted language is [bracketed]):
"The fund seeks a high level of current income((.)) [by investing
primarily in high-yielding, fixed-income securities. In pursuing this
objective,] [g]((G))rowth of capital may also be considered [when
consistent with the fund's objective of seeking high current income]."
As indicated above, if the proposal is approved, the fundamental
investment policies currently incorporated into the fund's fundamental
investment objective (i.e., "by investing primarily in high-yielding,
fixed-income securities" and "when consistent with the fund's objective of
seeking high current income") would be eliminated from the objective. The
eliminated policies are currently described elsewhere in the fund's disclosure.
Eliminating these policies from the fund's investment objective will allow the
fund to comply with the requirements of revised Form N-1A for concise,
understandable descriptions of its investment objective and policies, and will
allow the fund to more clearly communicate its investment objective - and its
secondary objective, growth of capital - and strategies to shareholders.
Eliminating these policies from the fund's investment objective is not expected
to materially affect the investment strategies or performance of the fund.
45
<PAGE>
CONCLUSION. The Board of Trustees has concluded that the proposed
elimination of the foregoing fundamental investment policies will benefit the
fund and its shareholders. The Trustees recommend voting FOR the proposal. If
approved by shareholders, the elimination of the policies will become effective
when disclosure is revised to reflect the changes. If the proposal is not
approved by the fund's shareholders, the fund's current fundamental investment
policies will remain unchanged.
13. TO AMEND SPARTAN GOVERNMENT INCOME FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING REAL ESTATE.
The fund's fundamental investment limitation concerning real estate
currently states:
"The fund may not purchase or sell real estate unless acquired as a
result of ownership of securities (but this shall not prevent the fund
from investing in securities or other instruments backed by real estate
or securities of companies engaged in the real estate business)."
The Trustees recommend that shareholders of the fund vote to replace
this fundamental investment limitation with the following fundamental investment
limitation governing purchases and sales of real estate (additional language is
((underlined))):
"The fund may not purchase or sell real estate unless acquired as a
result of ownership of securities ((or other instruments)) (but this
shall not prevent the fund from investing in securities or other
instruments backed by real estate or securities of companies engaged in
the real estate business)."
The primary purpose of the proposed amendment is to clarify the types
of securities in which the fund is authorized to invest and to conform the
fund's fundamental real estate limitation to a limitation that is expected to
become standard for all funds managed by FMR. (See "Adoption of Standardized
Investment Limitations" on page __.) If the proposal is approved, the new
fundamental real estate limitation may not be changed without the approval of
shareholders.
Adoption of the proposed limitation concerning real estate is not
expected to significantly affect the way in which the fund is managed, the
investment performance of the fund, or the securities or instruments in which
the fund invests. However, to the extent that the fund invests to a greater
extent in real estate related securities, it will be subject to the risks of the
real estate market. This industry is sensitive to factors such as changes in
real estate values and property taxes, overbuilding, variations in rental
income, and interest rates. Performance could also be affected by the structure,
cash flow, and management skill of real estate companies.
The fund does not expect to acquire real estate. However, the proposed
limitation would clarify several points. First, the proposed limitation would
make explicit that the fund may acquire a security or other instrument that is
secured by a mortgage or other right to foreclose on real estate, in the event
of a default. Any investments in these securities or other instruments are, of
46
<PAGE>
course, subject to the fund's investment objective and policies and to other
limitations regarding diversification and concentration in particular
industries. Also, the proposed limitation specifically permits the fund to sell
real estate acquired as a result of ownership of securities or other
instruments. However, in light of the types of securities in which the fund
regularly invests, FMR considers this to be a remote possibility.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit the fund and its shareholders. The Trustees recommend voting FOR the
proposal. Upon shareholder approval, the amended fundamental limitation will
become effective when disclosure is revised to reflect the changes. If the
proposal is not approved by the shareholders of the fund, the fund's current
limitation will remain unchanged.
ADOPTION OF STANDARDIZED INVESTMENT LIMITATIONS
The primary purpose of Proposals 14 through 16 is to revise several of
the funds' investment limitations to conform to limitations which are standard
for similar types of funds managed by FMR. The Board of Trustees asked FMR to
analyze the various fundamental and non-fundamental investment limitations of
the Fidelity funds, and, where practical and appropriate to a fund's investment
objective and policies, propose to shareholders adoption of standard fundamental
limitations and elimination of certain other fundamental limitations. Generally,
when fundamental limitations are eliminated, Fidelity's standard non-fundamental
limitations replace them. By making these limitations non-fundamental, the Board
of Trustees may amend a limitation as they deem appropriate, without seeking
shareholder approval. The Board of Trustees would amend the limitations to
respond, for instance, to developments in the marketplace, or changes in federal
or state law. The costs of shareholder meetings called for these purposes are
generally borne by a fund and its shareholders.
It is not anticipated that these proposals will substantially affect
the way a fund is currently managed. However, FMR is presenting them to you for
your approval because FMR believes that increased standardization will help to
promote operational efficiencies and facilitate monitoring of compliance with
fundamental and non-fundamental investment limitations. Although adoption of a
new or revised limitation is not likely to have any impact on the current
investment techniques employed by a fund, it will contribute to the overall
objectives of standardization.
14. TO AMEND THE FUNDAMENTAL INVESTMENT LIMITATION CONCERNING
DIVERSIFICATION TO EXCLUDE "SECURITIES OF OTHER INVESTMENT COMPANIES"
FROM THE LIMITATION FOR EACH FUND.
Fidelity Investment Grade Bond Fund's, Fidelity Short-Term Bond Fund's,
and Spartan Short-Intermediate Government Fund's current fundamental investment
limitation concerning diversification is as follows:
"The fund may not with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
47
<PAGE>
instrumentalities) if, as a result, (a) more than 5% of the fund's
total assets would be invested in the securities of that issuer, or (b)
the fund would hold more than 10% of the outstanding voting securities
of that issuer."
The Trustees recommend that shareholders of Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, and Spartan Short-Intermediate
Government Fund vote to replace each fund's current fundamental investment
limitation with the following amended fundamental investment limitation
governing diversification (additional language is ((underlined)) and deleted
language is [bracketed]):
"The fund may not with respect to 75% of the fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. [g]((G))overnment or any of its agencies or
instrumentalities((, or securities of other investment companies))) if,
as a result, (a) more than 5% of the fund's total assets would be
invested in the securities of that issuer, or (b) the fund would hold
more than 10% of the outstanding voting securities of that issuer."
Spartan Government Income Fund's and Fidelity High Income Fund's
current fundamental investment limitation concerning diversification is as
follows:
"The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United States
or its agencies or instrumentalities) if, as a result, (a) more than
25% of the value of its total assets would be invested in the
securities of a single issuer, or (b) with respect to 75% of its total
assets, more than 5% of the value of its total assets would be invested
in the securities of a single issuer."
The Trustees recommend that shareholders of Spartan Government Income
Fund and Fidelity High Income Fund vote to replace each fund's current
fundamental investment limitation with the following amended fundamental
investment limitation governing diversification (additional language is
((underlined)) and deleted language is [bracketed]):
"The fund may not ((with respect to 75% of the fund's total assets,))
purchase the securities of any issuer (other than [obligations]
((securities)) issued or guaranteed by the [government of the United
States] ((U.S. Government)) or ((any of)) its agencies or
instrumentalities((, or securities of other investment companies))) if,
as a result, (a) more than [25%] ((5%)) of the [value of its]
((fund's)) total assets would be invested in the securities of [a
single] ((that)) issuer, or (b) [with respect to 75% of its total
assets, more than 5% of the value of its total assets would be invested
in] the ((fund would hold more than 10% of the outstanding voting))
securities of [a single] ((that)) issuer."
The percentage limits in the proposed fundamental limitation concerning
diversification are the percentage limitations imposed by the 1940 Act for
diversified investment companies.
For Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond Fund,
Spartan Short-Intermediate Government Fund, Spartan Government Income Fund, and
Fidelity High Income Fund, the amended fundamental diversification limitation
48
<PAGE>
makes the following change from the current limitation: subject to applicable
1940 Act requirements, it would permit each fund to invest without limit in the
securities of other investment companies. Pursuant to an order of exemption
granted by the SEC, each fund may invest up to 25% of total assets in
non-publicly offered money market or short-term bond funds (the Central Funds)
managed by FMR or an affiliate of FMR. The Central Funds do not currently pay
investment advisory, management, or transfer agent fees, but do pay minimal fees
for services, such as custodian, auditor, and Independent Trustees fees. FMR
anticipates that making use of the Central Funds will benefit each fund by
enhancing the efficiency of cash management and by providing increased
short-term investment opportunities. If the proposal is approved, the Central
Funds are expected to serve as a principal option for cash investment for each
fund.
In addition, for Spartan Government Income Fund and Fidelity High
Income Fund, the amended fundamental diversification limitation makes the
following change from the current limitation: it would allow each fund, with
respect to 25% of its total assets, to hold more than 10% of the voting
securities of any issuer. Each fund will continue to be required to invest 75%
of its total assets so that no more than 5% of total assets are invested in any
one issuer and will now be required to invest 75% of its total assets so that it
owns no more than 10% of the voting securities of any such issuer. FMR does not
expect that approval of this proposal will materially affect the way in which a
fund is managed with regard to the fund's holding more than 10% of the voting
securities of an issuer. Currently, each fund has a non-fundamental investment
limitation that requires it to invest 75% of its total assets so that it owns no
more than 10% of the voting securities of any one issuer.
If this proposal is approved, the amended fundamental diversification
limitation cannot be changed without the approval of the shareholders.
CONCLUSION. The Board of Trustees has concluded that the proposed
amendment will benefit each fund and its shareholders. The Trustees recommend
voting FOR the proposal. The amended fundamental diversification limitation,
upon shareholder approval, will become effective when disclosure is revised to
reflect the changes. If the proposal is not approved by the shareholders of a
fund, that fund's current fundamental diversification limitation will remain
unchanged.
15. TO AMEND FIDELITY SHORT-TERM BOND FUND'S FUNDAMENTAL INVESTMENT
LIMITATION CONCERNING UNDERWRITING.
The fund's current fundamental investment limitation concerning
underwriting states:
"The fund may not underwrite securities issued by others, except to the
extent that the sale of restricted securities or the purchase of bonds
in accordance with the fund's investment objective, policies, and
limitations, either directly from the issuer, or from an underwriter
for an issuer, may be deemed to be underwriting."
The trustees recommend that shareholders of the fund vote to replace
this limitation with the following fundamental limitation governing underwriting
(additional language is ((underlined)) and deleted language is [bracketed]):
49
<PAGE>
"The fund may not underwrite securities issued by others, except to the
extent that the [sale of restricted securities or the purchase of bonds
in accordance with the fund's investment objective, policies, and
limitations, either directly from the issuer, or from an underwriter
for an issuer, may be deemed to be underwriting] ((fund may be
considered an underwriter within the meaning of the Securities Act of
1933 in the disposition of restricted securities))."
The primary purpose of the proposed amendment is to clarify the fund's
fundamental policy with respect to underwriting. The proposal also serves to
conform the fund's fundamental investment limitation concerning underwriting to
a limitation which is expected to become standard for all funds managed by FMR.
(See "Adoption of Standardized Investment Limitations" on page __.) If the
proposal is approved, the new limitation may not be changed without the approval
of shareholders.
Adoption of the proposed limitation concerning underwriting is not
expected to affect the way in which the fund is managed, the investment
performance of the fund, or the securities or instruments in which the fund
invests.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit the fund and its shareholders. The Trustees recommend voting FOR the
proposal. Upon shareholder approval, the amended fundamental limitation will
become effective when disclosure is revised to reflect the changes. If the
proposal is not approved by the shareholders of the fund, the fund's current
limitation will remain unchanged.
16. TO AMEND EACH OF FIDELITY SHORT-TERM BOND FUND'S AND FIDELITY HIGH
INCOME FUND'S FUNDAMENTAL INVESTMENT LIMITATION CONCERNING THE
CONCENTRATION OF ITS INVESTMENTS IN A SINGLE INDUSTRY.
Fidelity Short-Term Bond Fund's current fundamental investment
limitation concerning the concentration of its investments within a single
industry states:
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. government or its agencies
or instrumentalities) if, as a result, more than 25% of the value of
its total assets would be invested in securities of companies having
their principal business activities in the same industry."
The Trustees recommend that shareholders of Fidelity Short-Term Bond
Fund vote to replace this fundamental investment limitation with the following
amended fundamental investment limitation governing concentration (additional
language is ((underlined)) and deleted language is [bracketed]):
"The fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. [g]((G))overnment or ((any
of)) its agencies or instrumentalities) if, as a result, more than 25%
50
<PAGE>
of the [value of its] ((fund's)) total assets would be invested in
((the)) securities of companies [having their] ((whose)) principal
business activities ((are)) in the same industry."
Fidelity High Income Fund's current fundamental investment limitation
concerning the concentration of its investments within a single industry states:
"The fund may not purchase the securities of any issuer (other than
obligations issued or guaranteed by the government of the United States
or its agencies or instrumentalities) if, as a result, more than 25% of
the fund's total assets (taken at current value) would be invested in
the securities of issuers having their principal business activities in
the same industry."
The Trustees recommend that shareholders of Fidelity High Income Fund
vote to replace this fundamental investment limitation with the following
amended fundamental investment limitation governing concentration (additional
language is ((underlined)) and deleted language is [bracketed]):
"The fund may not purchase the securities of any issuer (other than
[obligations] ((securities)) issued or guaranteed by the [government of
the United States] ((U.S. Government)) or ((any of)) its agencies or
instrumentalities) if, as a result, more than 25% of the fund's total
assets [(taken at current value)] would be invested in the securities
of [issuers having their] ((companies whose)) principal business
activities ((are)) in the same industry."
The primary purpose of the proposal is to revise each fund's
fundamental concentration limitation to conform to a limitation which is
expected to become standard for all funds managed by FMR. (See "Adoption of
Standardized Investment Limitations" on page __.) If the proposal is approved,
the new fundamental concentration limitation could not be changed without the
approval of shareholders.
Adoption of the proposed amended limitation on concentration is not
expected to affect the way each fund is managed, the investment performance of
each fund, or the securities or instruments in which each fund invests.
The proposed amended limitation is not substantially different from the
current policy and is not likely to have any impact on the investment techniques
employed by each fund.
CONCLUSION. The Board of Trustees has concluded that the proposal will
benefit each fund and its shareholders. The Trustees recommend voting FOR the
proposal. Upon shareholder approval, the amended fundamental limitation will
become effective when disclosure is revised to reflect the changes. If the
proposal is not approved by the shareholders of a fund, that fund's current
limitation will remain unchanged.
OTHER BUSINESS
51
<PAGE>
In addition to Proposals 1, 2, 3, 4 and 14 included in this Proxy
Statement, shareholders of Spartan Short-Intermediate Government Fund will be
asked at the Meeting to vote on an additional item: the proposed merger of
Spartan Short-Intermediate Government Fund into Fidelity Intermediate Government
Income Fund (the Reorganization). The Reorganization is explained in detail in a
separate proxy statement/prospectus (the Proxy/Prospectus) mailed with this
Proxy Statement to Spartan Short-Intermediate Government Fund shareholders. If
Spartan Short-Intermediate Government Fund shareholders approve the
Reorganization, the fund would cease to exist on the Closing Date (defined
below) and shareholders of Spartan Short-Intermediate Government Fund would
become shareholders of Fidelity Intermediate Government Income Fund. If the
Reorganization is not approved, Spartan Short-Intermediate Government Fund will
continue as a series of Fidelity Fixed-Income Trust and will be subject to any
changes resulting from the approval of Proposals 1, 2, 3, 4 and 14.
The following paragraphs summarize certain information contained in the
Proxy/Prospectus.
THE PROPOSED REORGANIZATION. Shareholders of Spartan Short-Intermediate
Government Fund will be asked at the Meeting to vote upon and approve an
Agreement and Plan of Reorganization, which provides for the acquisition by
Fidelity Intermediate Government Income Fund of all of the assets of Spartan
Short-Intermediate Government Fund in exchange solely for shares of Fidelity
Intermediate Government Income Fund and the assumption by Fidelity Intermediate
Government Income Fund of the liabilities of Spartan Short-Intermediate
Government Fund. Spartan Short-Intermediate Government Fund will then distribute
the shares of Fidelity Intermediate Government Income Fund to its shareholders,
so that each shareholder will receive the number of full and fractional shares
of Fidelity Intermediate Government Income Fund equal in value to the aggregate
net asset value of the shareholder's shares of Spartan Short-Intermediate
Government Fund on the Closing Date (defined below). The exchange of Spartan
Short-Intermediate Government Fund's assets for Fidelity Intermediate Government
Income Fund's shares will occur as of the close of business of the New York
Stock Exchange (NYSE) on April 22, 1999, or such other time and date as the
parties may agree (the Closing Date). Spartan Short-Intermediate Government Fund
will then be liquidated as soon as practicable thereafter.
Spartan Short-Intermediate Government Fund has received an opinion of
counsel that the Reorganization will not result in any gain or loss for federal
income tax purposes to Spartan Short-Intermediate Government Fund or to its
shareholders. The rights and privileges of the former shareholders of Spartan
Short-Intermediate Government Fund will be effectively unchanged by the
Reorganization, except as described under the heading "Forms of Organization" in
the Proxy /Prospectus.
INVESTMENT OBJECTIVES AND POLICIES. Spartan Short-Intermediate
Government Fund and Fidelity Intermediate Government Income Fund have
substantially similar investment objectives: to seek a high level of current
income as is consistent with the preservation of capital. The funds invest only
in U.S. Government securities, repurchase agreements and other instruments
52
<PAGE>
related to U.S. Government securities under normal conditions. FMR, the funds'
investment adviser, normally invests at least 65% of each fund's total assets in
U.S. Government securities and in repurchase agreements for U.S. Government
securities.
The main differences between the funds are their average maturity and
their interest rate risk. Spartan Short-Intermediate Government Fund seeks to
maintain an average maturity between two and five years and is managed to have
similar overall interest rate risk to an index of U.S. Government bonds with
maturities between one and five years. Fidelity Intermediate Government Income
Fund, by contrast, seeks to maintain an average maturity between three and ten
years, and is managed to have similar overall interest rate risk to an index of
U.S. Government bonds with maturities between one and ten years. Fidelity
Intermediate Government Income Fund, therefore, currently has a longer average
maturity and greater interest rate risk than Spartan Short-Intermediate
Government Fund.
EXPENSE STRUCTURES. Spartan Short-Intermediate Government Fund and
Fidelity Intermediate Government Income Fund have similar contractual expense
structures. Both funds pay a monthly management fee to FMR. Spartan
Short-Intermediate Government Fund and Fidelity Intermediate Government Income
Fund each pays an all-inclusive management fee to FMR (at an annual rate of
0.65% of average net assets) which covers substantially all of each fund's
expenses (excluding interest, taxes, brokerage commissions and extraordinary
expenses). If the Reorganization is approved, FMR has agreed to limit the
combined fund's total operating expenses to 0.63% of its average net assets
through June 30, 2001 (excluding interest, taxes, brokerage commissions and
extraordinary expenses). After that date, the combined fund's expenses could
increase.
In sum, the proposed Reorganization would provide Spartan
Short-Intermediate Government Fund shareholders with the opportunity to
participate in a larger, similar fund with greater interest rate risk and
expenses guaranteed to be lower than Spartan Short-Intermediate Government
Fund's for more than two years. Greater interest rate risk would likely result
in better relative performance during periods of falling interest rates and
worse relative performance during periods of rising interest rates. Fidelity
Intermediate Government Income Fund has had better historical performance and
greater interest rate risk than Spartan Short-Intermediate Government Fund.
If any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matters in accordance with the judgment of the persons
therein designated.
ACTIVITIES AND MANAGEMENT OF FMR
FMR, a corporation organized in 1946, serves as investment adviser to a
number of investment companies. Information concerning the advisory fees, net
assets, and total expenses of funds with investment objectives similar to
Fidelity Investment Grade Bond Fund, Fidelity Short-Term Bond Fund, and Fidelity
High Income Fund and advised by FMR is contained in the Table of Average Net
Assets and Expense Ratios in Exhibit 7 beginning on page __.
53
<PAGE>
FMR, its officers and directors, its affiliated companies, and the
Trustees, from time to time have transactions with various banks, including the
custodian banks for certain of the funds advised by FMR. Those transactions that
have occurred to date have included mortgages and personal and general business
loans. In the judgment of FMR, the terms and conditions of those transactions
were not influenced by existing or potential custodial or other fund
relationships.
The Directors of FMR are Edward C. Johnson 3d, Chairman of the Board
and of the Executive Committee; Robert C. Pozen, President; and Peter S. Lynch,
Vice Chairman. Each of the Directors is also a Trustee of the trust. Messrs.
Johnson 3d, Pozen, J. Gary Burkhead, John H. Costello, Eric D. Roiter, Richard
A. Silver, Leonard M. Rush, Fred L. Henning, Jr., Dwight D. Churchill, Bart
A. Grenier, Kevin E. Grant, Andrew J. Dudley, Curt Hollingsworth, and Thomas
T. Soviero are currently officers of the trust and officers or employees of FMR
or FMR Corp. With the exception of Mr. Costello, Mr. Silver, and ____, all
of these persons hold or have options to acquire stock of FMR Corp. The
principal business address of each of the Directors of FMR is 82 Devonshire
Street, Boston, Massachusetts 02109.
All of the stock of FMR is owned by its parent company, FMR Corp., 82
Devonshire Street, Boston, Massachusetts 02109, which was organized on October
31, 1972. Members of Mr. Edward C. Johnson 3d's family are the predominant
owners of a class of shares of common stock, representing approximately 49% of
the voting power of FMR Corp., and, therefore, under the 1940 Act may be deemed
to form a controlling group with respect to FMR Corp.
During the period May 1, 1997 through December 31, 1998, [the following
transactions/no transactions] were entered into by Trustees and nominees as
Trustee of the trust involving more than 1% of the voting common, non-voting
common and equivalent stock, or preferred stock of FMR Corp.
ACTIVITIES AND MANAGEMENT OF FIMM
FIMM is a wholly owned subsidiary of FMR formed in 1997 to provide
portfolio management services to Fidelity's money market funds and investment
advice with respect to money market instruments.
Funds with investment objectives similar to Fidelity Investment Grade
Bond Fund and Fidelity Short-Term Bond Fund for which FMR has entered into a
sub-advisory agreement with FIMM, and the net assets of each of these funds, are
indicated in the Table of Average Net Assets and Expense Ratios in Exhibit 7
beginning on page __.
The Directors of FIMM are Edward C. Johnson 3d, Chairman, and Robert C.
Pozen, President. Mr. Johnson 3d also is President and a Trustee of the trust
and of other funds advised by FMR; Chairman, Chief Executive Officer, President,
and a Director of FMR Corp.; a Director and Chairman of the Board and of the
Executive Committee of FMR; and Chairman and a Director of FMR U.K. and FMR Far
East. In addition, Mr. Pozen is Senior Vice President and a Trustee of the trust
and of other funds advised by FMR; a Director of FMR Corp.; President and a
Director of FMR; and President and a Director of FMR U.K. and FMR Far East. Each
54
<PAGE>
of the Directors is a stockholder of FMR Corp. The principal business address of
the Directors is 82 Devonshire Street, Boston, Massachusetts 02109.
ACTIVITIES AND MANAGEMENT OF FMR U.K. AND FMR FAR EAST
FMR U.K. and FMR Far East are wholly-owned subsidiaries of FMR formed
in 1986 to provide research and investment advice with respect to companies
based outside the United States for certain funds for which FMR acts as
investment adviser. FMR may also grant the sub-advisers investment management
authority as well as authority to buy and sell securities for certain of the
funds for which it acts as investment adviser, if FMR believes it would be
beneficial to a fund.
Funds with investment objectives similar to Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, and Fidelity High Income Fund managed
by FMR with respect to which FMR currently has sub-advisory agreements with
either FMR U.K. or FMR Far East, and the net assets of each of these funds, are
indicated in the Table of Average Net Assets and Expense Ratios in Exhibit 7
beginning on page __.
The Directors of FMR U.K. and FMR Far East are Edward C. Johnson 3d,
Chairman, and Robert C. Pozen, President. Mr. Johnson 3d also is President and a
Trustee of the trust and of other funds advised by FMR; Chairman and a Director
of FIMM; Chairman, Chief Executive Officer, President, and a Director of FMR
Corp., and a Director and Chairman of the Board and of the Executive Committee
of FMR. In addition, Mr. Pozen is Senior Vice President and a Trustee of the
trust and of other funds advised by FMR; President and a Director of FMR; and
President and a Director of FIMM. Each of the Directors is a stockholder of FMR
Corp. The principal business address of the Directors is 82 Devonshire Street,
Boston, Massachusetts 02109.
PRESENT MANAGEMENT CONTRACTS OF FIDELITY INVESTMENT GRADE
BOND FUND AND FIDELITY SHORT-TERM BOND FUND
Each fund employs FMR to furnish investment advisory and other
services. Under its management contract with each fund, FMR acts as investment
adviser and, subject to the supervision of the Board of Trustees, directs the
investments of each fund in accordance with its investment objective, policies,
and limitations. FMR also provides each fund with all necessary office
facilities and personnel for servicing each fund's investments, compensates all
officers of each fund and all Trustees who are "interested persons" of the trust
or of FMR, and all personnel of each fund or FMR performing services relating to
research, statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services necessary
for the operation of each fund. These services include providing facilities for
maintaining each fund's organization; supervising relations with custodians,
transfer and pricing agents, accountants, underwriters, and other persons
dealing with each fund; preparing all general shareholder communications and
conducting shareholder relations; maintaining each fund's records and the
55
<PAGE>
registration of each fund's shares under federal and state laws; developing
management and shareholder services for each fund; and furnishing reports,
evaluations, and analyses on a variety of subjects to the Trustees. Services
provided by affiliates of FMR will continue under the proposed management
contract described in Proposal 5.
In addition to the management fee payable to FMR, each fund pays
transfer agent and pricing and bookkeeping fees to Fidelity Service Company,
Inc. (FSC), an affiliate of FMR, its transfer, dividend disbursing, and
shareholder servicing agent. Although each fund's current management contract
provides that each fund will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices, and reports to
shareholders, the trust, on behalf of each fund has entered into a revised
transfer agent agreement with FSC, pursuant to which FSC bears the costs of
providing these services to existing shareholders. Other expenses paid by each
fund include interest, taxes, brokerage commissions, and each fund's
proportionate share of insurance premiums and Investment Company Institute dues.
Each fund is also liable for such non-recurring expenses as may arise, including
costs of any litigation to which each fund may be a party, and any obligation it
may have to indemnify its officers and Trustees with respect to litigation.
Transfer agent fees and pricing and bookkeeping fees, including
reimbursement for out-of-pocket expenses, paid to FSC by Fidelity Investment
Grade Bond Fund and Fidelity Short-Term Bond Fund for the fiscal year ended
April 30, 1998 amounted to $4,205,000 and $2,168,000, respectively.
Each fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered under
the Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. Each distribution agreement calls for FDC to use all
reasonable efforts, consistent with its other business, to secure purchasers for
shares of the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer and sale of
shares are paid by FMR.
FMR is each fund's manager pursuant to a management contract dated
November 1, 1993, which was approved by shareholders on October 20, 1993. For
Fidelity Investment Grade Bond Fund, shareholder approval had been requested to
increase the individual fund fee rate from 0.20% to 0.30%. For Fidelity
Short-Term Bond Fund, shareholder approval had been requested to modify the
group fee portion of the management fee to provide for lower fee rates if FMR's
assets under management remain above $120 billion.
For the services of FMR under each management contract, each fund pays
FMR a monthly management fee which has two components: a group fee rate and an
individual fund fee rate.
The group fee rate is based on the monthly average net assets of all of
the registered investment companies with which FMR has management contracts and
is calculated on a cumulative basis pursuant to the graduated fee rate schedule
shown below on the left. The schedule below on the right shows the effective
56
<PAGE>
annual group fee rate at various asset levels, which is the result of
cumulatively applying the annualized rates on the left. For example, the
effective annual fee rate at $626 billion of group net assets - the approximate
level for April 1998 - was 0.1339%, which is the weighted average of the
respective fee rates for each level of group net assets up to $626 billion.
On January 1, 1996, August 1, 1994, and November 1, 1993, FMR
voluntarily modified the breakpoints in the group fee rate schedule. The revised
group fee rate schedule, depicted below, provides for lower management fee rates
as FMR's assets under management increase.
GROUP FEE RATE SCHEDULE EFFECTIVE ANNUAL FEE RATES
----------------------- --------------------------
Average Group Annualized Group Net Effective Annual
Assets Rate Assets Fee Rate
------ ---- ------ --------
0 - $3 billion .3700% $0.5 billion .3700%
3 - 6 .3400 25 .2664
6 - 9 .3100 50 .2188
9 - 12 .2800 75 .1986
12 - 15 .2500 100 .1869
15 - 18 .2200 125 .1793
18 - 21 .2000 150 .1736
21 - 24 .1900 175 .1690
24 - 30 .1800 200 .1652
30 - 36 .1750 225 .1618
36 - 42 .1700 250 .1587
42 - 48 .1650 275 .1560
48 - 66 .1600 300 .1536
66 - 84 .1550 325 .1514
84 - 120 .1500 350 .1494
120 - 156 .1450 375 .1476
156 - 192 .1400 400 .1459
192 - 228 .1350 425 .1443
228 - 264 .1300 450 .1427
264 - 300 .1275 475 .1413
300 - 336 .1250 500 .1399
336 - 372 .1225 525 .1385
372 - 408 .1200 550 .1372
408 - 444 .1175
444 - 480 .1150
480 - 516 .1125
Over 516 .1100
Each fund's individual fund fee rate is 0.30%. Based on the average
group net assets of the funds advised by FMR for April 1998, each fund's annual
management fee rate would be calculated as follows:
57
<PAGE>
Group Fee Rate Individual Fund Management Fee
-------------- Fee Rate Rate
-------- ----
Fidelity Investment 0.1339% + 0.30% = 0.4339%
Grade Bond Fund
Fidelity Short-Term Bond 0.1339% + 0.30% = 0.4339%
Fund
One-twelfth of this annual management fee rate is applied to each
fund's net assets averaged for the most recent month, giving a dollar amount,
which is the fee for that month.
During the fiscal year ended April 30, 1998, FMR received $_____, and
____ for its services as investment adviser to Fidelity Investment Grade Bond
Fund and Fidelity Short-Term Bond Fund, respectively. This fee was equivalent to
__% and __%, respectively, of the average net assets of Fidelity Investment
Grade Bond Fund and Fidelity Short-Term Bond Fund.
FMR may, from time to time, agree to reimburse all or a portion of each
fund's total operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be repaid
for these expense reimbursements in the amount that expenses fall below the
limit prior to the end of the fiscal year.
FMR has voluntarily agreed, subject to revision or termination, to
reimburse Fidelity Short-Term Bond Fund to the extent that its total operating
expenses, as a percentage of its average net assets exceed 0.65%.
PRESENT MANAGEMENT CONTRACT OF FIDELITY HIGH INCOME FUND
The fund employs FMR to furnish investment advisory and other services.
Under its management contract with the fund, FMR acts as investment adviser and,
subject to the supervision of the Board of Trustees, directs the investments of
the fund in accordance with its investment objective, policies, and limitations.
FMR also provides the fund with all necessary office facilities and personnel
for servicing the fund's investments, compensates all officers of the fund and
all Trustees who are "interested persons" of the trust or of FMR, and all
personnel of the fund or FMR performing services relating to research,
statistical, and investment activities.
In addition, FMR or its affiliates, subject to the supervision of the
Board of Trustees, provide the management and administrative services necessary
for the operation of the fund. These services include providing facilities for
maintaining the fund's organization; supervising relations with custodians,
transfer and pricing agents, accountants, underwriters, and other persons
dealing with the fund; preparing all general shareholder communications and
conducting shareholder relations; maintaining the fund's records and
58
<PAGE>
registration of the fund's shares under federal and state laws; developing
management and shareholder services for the fund; and furnishing reports,
evaluations, and analyses on a variety of subjects to the Trustees. Services
provided by affiliates of FMR will continue under the proposed management
contract described in Proposal 6.
FMR is responsible for the payment of all operating expenses of the
fund with certain exceptions. Specific expenses payable by FMR include expenses
for typesetting, printing, and mailing proxy materials to shareholders; legal
expenses, fees of the custodian, auditor, and interested Trustees; the fund's
proportionate share of insurance premiums and Investment Company Institute dues,
and the costs of registering shares under federal securities laws and making
necessary filings under state securities laws. The fund's management contract
further provides that FMR will pay for typesetting, printing, and mailing
prospectuses, statements of additional information, notices and reports to
shareholders; however, under the terms of the fund's transfer agent agreement,
the transfer agent bears the costs of providing these services to existing
shareholders. FMR also pays all fees associated with transfer agency, dividend
disbursing, and shareholder services, pricing and bookkeeping services, and
administration of the fund's securities lending program.
FMR pays all other expenses of the fund with the following exceptions:
fees and expenses of all Trustees of the trust who are not "interested persons"
of the trust or FMR (the non-interested Trustees), interest, taxes, brokerage
commissions (if any), and such nonrecurring expenses as may arise, including
costs of any litigation to which the fund may be a party, and any obligation it
may have to indemnify its officers and Trustees with respect to litigation.
FMR is the fund's manager pursuant to a management contract dated
November 1, 1993, which was approved by shareholders on October 20, 1993.
Shareholder approval had been requested to increase the management fee rate from
0.70% to 0.80%. The management fee paid to FMR is reduced by an amount equal to
the fees and expenses paid by the fund to the non-interested Trustees.
For the services of FMR under the management contract, the fund pays
FMR a monthly management fee at the annual rate of 0.80% of its average net
assets throughout the month. Fees received by FMR, after reduction of fees and
expenses paid by the fund to the non-interested trustees, for the fiscal year
ended April 30, 1998 from the fund were $19,311,000.
FMR may, from time to time, agree to reimburse all or a portion of the
fund's total operating expenses (exclusive of interest, taxes, brokerage
commissions, and extraordinary expenses). FMR retains the ability to be repaid
for these expense reimbursements in the amount that expenses fall below the
limit prior to the end of the fiscal year.
The fund also has a distribution agreement with FDC, a Massachusetts
corporation organized on July 18, 1960. FDC is a broker-dealer registered under
the Securities Exchange Act of 1934 and is a member of the National Association
of Securities Dealers, Inc. The distribution agreement calls for FDC to use all
reasonable efforts, consistent with its other business, to secure purchasers for
59
<PAGE>
shares of the fund, which are continuously offered at net asset value per share.
Promotional and administrative expenses in connection with the offer and sale of
shares are paid by FMR.
SUB-ADVISORY AGREEMENTS FOR FIDELITY INVESTMENT GRADE BOND
FUND, FIDELITY SHORT-TERM BOND FUND, AND FIDELITY HIGH INCOME
FUND
On behalf of Fidelity Investment Grade Bond Fund and Fidelity
Short-Term Bond Fund, FMR has entered into a sub-advisory agreement with FIMM
pursuant to which FIMM has primary responsibility for providing portfolio
investment management services to each fund. Under the sub-advisory agreements,
dated January 1, 1999, FMR pays FIMM fees equal to 50% of the management fee
payable to FMR under its management contract with each fund. The fees paid to
FIMM are not reduced by any voluntary or mandatory expense reimbursements that
may be in effect from time to time.
On behalf of Fidelity Investment Grade Bond Fund, Fidelity Short-Term
Bond Fund, and Fidelity High Income Fund, FMR has entered into sub-advisory
agreements with FMR U.K. and FMR Far East. Pursuant to the sub-advisory
agreements, FMR may receive investment advice and research services outside the
United States from the sub-advisers. Fidelity Investment Grade Bond Fund's and
Fidelity Short-Term Bond Fund's sub-advisory agreements, dated November 1, 1989,
were approved by shareholders of each fund on October 18, 1989. Fidelity High
Income Fund's sub-advisory agreements, dated November 1, 1993, were approved by
shareholders of the fund on October 20, 1993.
Currently, FMR U.K. and FMR Far East each focus on issuers in countries
other than the United States such as those in Europe, Asia, and the Pacific
Basin.
FMR U.K. and FMR Far East, which were organized in 1986, are wholly
owned subsidiaries of FMR. Under the sub-advisory agreements FMR pays the fees
of FMR U.K. and FMR Far East. For providing non-discretionary investment advice
and research services, FMR pays FMR U.K. and FMR Far East fees equal to 110% and
105%, respectively, of FMR U.K.'s and FMR Far East's costs incurred in
connection with providing investment advice and research services.
For the fiscal year ended April 30, 1998, no fees were paid by FMR to
FMR U.K. or FMR Far East on behalf of the funds.
PORTFOLIO TRANSACTIONS
All orders for the purchase or sale of portfolio securities are placed
on behalf of each fund by FMR pursuant to authority contained in the fund's
management contract.
FMR may place agency transactions with National Financial Services
Corporation (NFSC) and Fidelity Brokerage Services (Japan), LLC (FBSJ), indirect
subsidiaries of FMR Corp., if the commissions are fair, reasonable, and
comparable to commissions charged by non-affiliated, qualified brokerage firms
60
<PAGE>
for similar services. Prior to December 9, 1997, FMR used research services
provided by and placed agency transactions with Fidelity Brokerage Services
(FBS), an indirect subsidiary of FMR Corp.
For the fiscal year ended April 30, 1998, Fidelity Investment Grade
Bond Fund, Fidelity Short-Term Bond Fund, Spartan Government Income Fund, and
Spartan Short-Intermediate Government Fund paid no brokerage commissions to
affiliated brokers. During the fiscal year ended April 30, 1998, Fidelity High
Income Fund paid brokerage commissions of $21,000 to NFSC [and/,] [$_______ to
FBS] [and $_____ to FBSJ]. During the fiscal year ended April 30, 1998, this
amounted to approximately 7.1% [and/,] [__%] [and __%] [,respectively,] of the
aggregate brokerage commissions paid by the fund.
SUBMISSION OF CERTAIN SHAREHOLDER PROPOSALS
The trust does not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a subsequent
shareholder meeting should send their written proposals to the Secretary of the
Trust, 82 Devonshire Street, Boston, Massachusetts 02109.
NOTICE TO BANKS, BROKER-DEALERS AND
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the trust, in care of ______, whether other persons are
beneficial owners of shares for which proxies are being solicited and, if so,
the number of copies of the Proxy Statement and Annual Reports you wish to
receive in order to supply copies to the beneficial owners of the respective
shares.
<PAGE>
EXHIBIT 1
FORM OF
AMENDED AND RESTATED DECLARATION OF TRUST
[DATED MARCH 17, 1994]
The language to be added to the current Declaration of Trust is
((underlined)), and the language to be deleted is set forth in [brackets].
Headings that were underlined in the trust's current Declaration of Trust remain
underlined in this Exhibit.
AMENDED AND RESTATED DECLARATION OF TRUST, made [March 17, 1994]
((___________, 1999))) by each of the trustees whose signature is affixed hereto
(the "trustees").
WHEREAS, the Trustees desire to amend and restate this Declaration of
Trust for the sole purpose of supplementing the Declaration ((of Trust)) to
incorporate amendments duly adopted; and
WHEREAS, this Trust was initially made on September 5, 1984 by Edward C.
Johnson 3d, Caleb Loring, Jr., and Frank Nesvet in order to establish a trust
fund for the investment and reinvestment of funds contributed thereto;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in
[T]((t))rust under this ((Amended and Restated)) Declaration of Trust as herein
set forth below.
ARTICLE I
NAME AND DEFINITIONS
NAME
SECTION 1. This Trust shall be known as "Fidelity Fixed-Income Trust."
DEFINITIONS
SECTION 2. Wherever used herein, unless otherwise required by the context
or specifically provided:
(a) The [T]((t))erms "Affiliated Person," "Assignment,"
"Commission," "Interested Person," "Majority Shareholder Vote" (the
67% or 50% requirement of the third sentence of Section 2(a)(42) of
the 1940 Act, whichever may be applicable), and "Principal Underwriter"
shall have the meanings given them in the 1940 Act [as amended from time
to time], ((as modified by or interpreted by any applicable order or
orders of the Commission or any rules or regulations adopted or
interpretative releases of the Commission thereunder));
(((b) "Bylaws" shall mean the bylaws of the Trust, if any, as
amended from time to time;))
(((c) "Class" refers to the class of Shares of a Series of the
Trust established in accordance with the provisions of Article III;))
(((d) "Declaration of Trust" means this Amended and Restated
Declaration of Trust, as further amended or restated, from time to time;))
[(c)](((e))) "Net Asset Value" means the net asset value of each
Series of the Trust ((or Class thereof)) determined in the manner provided
in Article X, Section 3;
[(d)](((f))) "Shareholder" means a record owner of Shares of the
Trust;
[(f)](((g))) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest of ((the Trust or))
each Series shall be divided from time to time, [and includes fractions of
shares] ((including such Class or Classes of Shares as the Trustees may
from time to time create and establish and including fractions of Shares))
<PAGE>
as well as whole [s]((S))hares ((as)) consistent with the requirements of
Federal and/or [other] ((state)) securities laws; [and]
(h) "Series" refers to ((any)) series of Shares of the Trust
established in accordance with the provisions of Article III ((;))[.]
[(b)](((i))) The "Trust" refers to Fidelity Fixed-Income Trust and
reference to the Trust, when applicable to one or more Series of the
Trust, shall refer to any such Series;
[(e)](((j))) The "Trustees" refer to the individual trustees in
their capacity as trustees hereunder of the Trust and their successor or
successors for the time being in office as such trustee or trustees; and
[(g)](((k))) The "1940 Act" refers to the Investment Company Act of
1940, as amended from time to time.
ARTICLE II
PURPOSE OF TRUST
The [P]((p))urpose of this Trust is to provide investors a continuous
source of managed investment in securities.
ARTICLE III
BENEFICIAL INTEREST
SHARES OF BENEFICIAL INTEREST
SECTION 1. The beneficial interest in the Trust shall be divided into such
transferable Shares of one or more separate and distinct Series ((or Classes of
Series)) as the Trustees shall, from time to time, create and establish. The
number of ((authorized)) Shares ((of each Series, and Class thereof)), is
unlimited [and each]((. Each)) Share shall be without par value and shall be
fully paid and nonassessable. The Trustees shall have full power and authority,
in their sole discretion, and without obtaining any prior authorization or vote
of the Shareholders of ((any Series or Class of)) the Trust (((a))) to create
and establish (and to change in any manner) Shares ((or any Series or Classes
thereof)) with such preferences, voting powers, rights, and privileges as the
Trustees may((,)) from time to time((,)) determine((; (b))) to divide or combine
the Shares ((or any Series or Classes thereof)) into a greater or lesser
number((; (c))) to classify or reclassify any issued Shares into one or more
Series ((or Classes)) of Shares((; (d))) to abolish any one or more Series ((or
Classes)) of Shares((;)) and (((e))) to take such other action with respect to
the Shares as the Trustees may deem desirable.
ESTABLISHMENT OF SERIES ((AND CLASSES))
SECTION 2. The establishment of any Series ((or Class thereof)) shall be
effective upon the adoption of a resolution by a majority of the then Trustees
setting forth such establishment and designation and the relative rights and
preferences of the Shares of such Series ((or Class)). At any time that there
are no Shares outstanding of any particular Series ((or Class)) previously
established and designated, the Trustees may by a majority vote abolish [that]
((such)) Series ((or Class)) and the establishment and designation thereof.
OWNERSHIP OF SHARES
SECTION 3. The ownership of Shares shall be recorded in the books of the
Trust ((or a transfer or similar agent)). The Trustees may make such rules as
they consider appropriate for the transfer of Shares and similar matters. The
record books of the Trust ((as kept by the Trust or by any transfer or similar
agent, as the case may be,)) shall be conclusive as to who are the holders of
Shares and as to the number of Shares held from time to time by each
Shareholder.
2
<PAGE>
INVESTMENT IN THE TRUST
SECTION 4. The Trustees shall accept investments in the Trust from such
persons and on such terms as they may, from time to time((,)) authorize. Such
investments may be in the form of cash, [or] securities, ((or other property))
in which the appropriate Series is authorized to invest, valued as provided in
Article X, Section 3. After the date of the initial contribution of capital, the
number of Shares to represent the initial contribution may in the Trustees'
discretion be considered as outstanding, and the amount received by the Trustees
on account of the contribution shall be treated as an asset of the Trust.
Subsequent investments in the Trust shall be credited to each Shareholder's
account in the form of full Shares at the Net Asset Value per Share next
determined after the investment is received; provided, however, that the
Trustees may, in their sole discretion (a) impose a sales charge ((or other
fee)) upon investments in the Trust ((or Series or any Classes thereof,)) and
(b) issue fractional Shares.
ASSETS AND LIABILITIES OF SERIES ((AND CLASSES))
SECTION 5. All consideration received by the Trust for the issue or sale
of Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits, and
proceeds thereof, including any proceeds derived from the sale, exchange, or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" that Series. In addition((,)) any assets,
income, earnings, profits, and proceeds thereof, funds, or payments [which]
((that)) are not readily identifiable as belonging to any particular Series ((or
Class)), shall be allocated by the Trustees between and among one or more of the
Series ((or Classes)) in such manner as they, in their sole discretion, deem
fair and equitable. Each such allocation shall be conclusive and binding upon
the Shareholders of all Series ((or Classes)) for all purposes and shall be
referred to as assets belonging to that Series ((or Class)). The assets
belonging to a particular Series shall be so recorded upon the books of the
Trust[,] ((or of its agent or agents)) and shall be held by the Trustees in
trust for the benefit of the holders of Shares of that Series.
The assets belonging to each particular Series shall be charged with the
liabilities of that Series and all expenses, costs, charges, and reserves
attributable to that Series, ((except that liabilities and expenses may, in the
Trustees' discretion, be allocated solely to a particular Class and, in which
case, shall be borne by that Class)). Any general liabilities, expenses, costs,
charges, or reserves of the Trust that are not readily identifiable as belonging
to any particular Series ((or Class)) shall be allocated and charged by the
Trustees between or among any one or more of the Series ((or Classes)) in such
manner as the Trustees, in their sole discretion, deem fair and equitable ((and
shall be referred to as "liabilities belonging to" that Series or Class)). Each
such allocation shall be conclusive and binding upon the Shareholders of all
Series or Classes for all purposes. Any creditor of any Series may look only to
the assets of that Series to satisfy such creditor's debt. [In case any holder
of record of Shares of a particular Series desires to dispose of his Shares, he
may deposit at the office of the transfer agent or other authorized agent of
that Series a written request or such other form of request as the Trustees may
from time to time authorize, requesting that the Series purchase the Shares in
accordance with this Section 2; and the Shareholder so requesting shall be
entitled to require the Series to purchase, and the Series or principal
underwriter of the Series shall purchase his said Shares, but only at the Net
asset Value thereof (as described in Section 3 thereof). The Series shall make
payment for any such Shares to be redeemed, as aforesaid, in cash or property
from the assets of that Series and payment for such Shares shall be made by the
Series or the principal underwriter of the Series to the Shareholder of record
within seven (7) days after the date upon which the request is effective.] ((No
Shareholder or former Shareholder of any Series shall have a claim on or any
right to any assets allocated or belonging to any other Series.))
NO PREEMPTIVE RIGHTS
SECTION 6. Shareholders shall have no preemptive or other right to
subscribe to any additional Shares or other securities issued by the Trust or
the Trustees.
((STATUS OF SHARES AND ))LIMITATION OF PERSONAL LIABILITY
SECTION 7. ((Shares shall be deemed to be personal property giving only
the rights provided in this instrument. Every shareholder by virtue of having
become a shareholder shall be held to have expressly assented and agreed to be
bound by the terms hereof. No Shareholder of the Trust and of each Series shall
be personally liable for the debts, liabilities, obligations, and expenses
3
<PAGE>
incurred by, contracted for, or otherwise existing with respect to, the Trust or
by or on behalf of any Series.)) The Trustees shall have no power to bind any
Shareholder personally or to call upon any [s]((S))hareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder
may((,)) at any time((,)) personally agree to pay by way of subscription for any
Shares or otherwise. Every note, bond, contract, or other undertaking issued by
or on behalf of the Trust or the Trustees relating to the Trust ((or to a
Series)) shall include a recitation limiting the obligation represented thereby
to the Trust ((or to one or more Series)) and its ((or their)) assets (but the
omission of such a recitation shall not operate to bind any Shareholder ((or
Trustee))).
ARTICLE IV
THE TRUSTEES
MANAGEMENT OF THE TRUST
SECTION 1. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry out
that responsibility.
[ELECTION: ]INITIAL TRUSTEES((; ELECTION))
SECTION 2. ((The initial Trustees shall be at least three individuals who
shall affix their signatures hereto.)) On a date fixed by the Trustees, the
Shareholders shall elect not less than three Trustees. A Trustee shall not be
required to be a Shareholder of the Trust. [The initial Trustees shall be Edward
C. Johnson 3rd, Caleb Loring, Jr. and Frank Nesvet and such other individuals as
the Board of Trustees shall appoint pursuant to Section 4 of the Article IV.]
TERM OF OFFICE OF TRUSTEES
SECTION 3. The Trustees shall hold office during the lifetime of this
Trust, and until its termination as hereinafter provided; except (a) that any
Trustee may resign his trust by written instrument signed by him and delivered
to the other Trustees, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument, signed by at least two-thirds (((2/3))) of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective; (c) that any Trustee who requests in writing to be
retired or who has become incapacitated by illness or injury may be retired by
written instrument signed by a majority of the other Trustees, specifying the
date of his retirement; and (d) a Trustee may be removed at any [S]((s))pecial
[M]((m))eeting of the Trust by a vote of two-thirds (((2/3))) of the outstanding
Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
SECTION 4. In case of the declination, death, resignation, retirement,
((or)) removal [, incapacity, or inability] of any of the Trustees, ((or)) in
case a vacancy shall, by reason of an increase in number ((of the Trustees)), or
for any other reason, exist, the remaining Trustees shall fill such vacancy by
appointing such other person as they in their discretion shall see fit
consistent with the limitations under the [Investment Company Act of] 1940
((Act)). Such appointment shall be evidenced by a written instrument signed by a
majority of the Trustees in office or by recording in the records of the Trust,
whereupon the appointment shall take effect. [Within three months of such
appointment the Trustees shall cause notice of such appointment to be mailed to
each Shareholder at his address as recorded on the books of the Trust.] An
appointment of a Trustee may be made by the Trustees then in office [and notice
thereof mailed to Shareholders as aforesaid] in anticipation of a vacancy to
occur by reason of retirement, resignation, or increase in number of Trustees
effective at a later date, provided that said appointment shall become effective
only at or after the effective date of said retirement, resignation((,)) or
increase in number of Trustees. As soon as any Trustee so appointed shall have
accepted this [t]((T))rust, the [t]((T))rust estate shall vest in the new
Trustee or Trustees, together with the continuing Trustees, without any further
act or conveyance, and he shall be deemed a Trustee hereunder. The ((foregoing))
power of appointment is subject to the provisions of Section 16(a) of the 1940
Act((, as modified by or interpreted by any applicable order or orders of the
Commission or any rules or regulations adopted or interpretative releases of the
Commission)).
4
<PAGE>
TEMPORARY ABSENCE OF TRUSTEE((S))
SECTION 5. Any Trustee may, by power of attorney, delegate his power for a
period not exceeding six (((6))) months at any one time to any other Trustee or
Trustees, provided that in no case shall less than two Trustees personally
exercise the other powers hereunder except as herein otherwise expressly
provided.
NUMBER OF TRUSTEES
SECTION 6. The number of Trustees, not less than three (3) nor more than
twelve (12), serving hereunder at any time shall be determined by the Trustees
themselves.
Whenever a vacancy in the Board of Trustees shall occur, until such
vacancy is filled, or while any Trustee is [absent from the Commonwealth of
Massachusetts or, if not a domiciliary of Massachusetts, is absent from his
state of domicile, or is] physically or mentally incapacitated by reason of
disease or otherwise, the other Trustees shall have all the powers hereunder and
the certificate of the other Trustees of such vacancy [, absence] or incapacity
shall be conclusive [, provided, however, that no vacancy shall remain
unfulfilled for a period longer than six calendar months].
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
SECTION 7. The death, declination, resignation, retirement, removal,
incapacity, or inability of the Trustees, or any one of them, shall not operate
to annul the Trust or to revoke any existing agency created pursuant to the
terms of this Declaration of Trust.
OWNERSHIP OF ASSETS OF THE TRUST
SECTION 8. The assets of the Trust shall be held separate and apart from
any assets now or hereafter held in any capacity other than as Trustee hereunder
by the Trustees or any successor Trustees. All of the assets of the Trust shall
at all times be considered as vested in the Trustees. No Shareholder shall be
deemed to have a severable ownership in any individual asset of the Trust or any
right of partition or possession thereof, but each Shareholder shall have a
proportionate undivided beneficial interest in the Trust.
ARTICLE V
POWERS OF THE TRUSTEES
POWERS
SECTION 1. The Trustees, in all instances, shall act as principals and are
and shall be free from the control of the Shareholders. The Trustees shall have
full power and authority to do any and all acts and to make and execute any and
all contracts and instruments that they may consider necessary or appropriate in
connection with the management of the Trust. ((Except as otherwise provided
herein or in the 1940 Act)), [T]((t))he Trustees shall not in any way be bound
or limited by present or future laws or customs in regard to trust investments,
but shall have full authority and power to make any and all investments [which]
((that)) they, in their [uncontrolled] discretion, shall deem proper to
accomplish the purpose of this Trust. Subject to any applicable limitation in
[the]((this)) Declaration of Trust or the Bylaws of the Trust, ((if any)), the
Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and to hold cash or
other property uninvested[,]without((,)) in any event((,)) being bound or
limited by any present or future law or custom in regard to investments by
Trustees, and to sell, exchange, lend, pledge, mortgage, hypothecate, write
options on((,)) and lease any or all of the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this Declaration of Trust
providing for the conduct of the business of the Trust and to amend and repeal
them to the extent that they do not reserve that right to the Shareholders.
(c) To elect and remove such officers and appoint and terminate such
agents as they consider appropriate.
(d) To employ [a bank or trust company as custodian] ((one or more banks,
trust companies, companies that are members of a national securities exchange,
or other entities permitted under the 1940 Act, as modified by or interpreted by
5
<PAGE>
any applicable order or orders of the Commission or any rules or regulations
adopted or interpretative releases of the Commission thereunder, as custodians))
of any assets of the Trust subject to any conditions set forth in this
Declaration of Trust or in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing agent, or both.
(f) To provide for the distribution of interests of the Trust either
through a [p]Principal [u]Underwriter in the manner hereinafter provided for or
by the Trust itself, or both.
(g) To set record dates in the manner hereinafter provided for.
(h) To delegate such authority as they consider desirable to any officers
of the Trust and to any [agent, custodian or underwriter] ((investment adviser,
manager, custodian, underwriter, or other agent or independent contractor)).
(i) To sell or exchange any or all of the assets of the Trust, subject to
the provisions of Article XII, Section 4[b] hereof.
(j) To vote or give assent[,] or exercise any rights of ownership[,] with
respect to stock or other securities or property; and to execute and deliver
powers of attorney to such person or persons as the Trustees shall deem proper,
granting to such person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or otherwise which in
any manner arise out of ownership of securities.
(l) To hold any security or property in a form not indicating any trust,
whether in bearer, unregistered((,)) or other negotiable form; or either in its
own name or in the name of a custodian or a nominee or nominees [, subject in
either case to proper safeguards according to the usual practice of
Massachusetts trust companies or investment companies].
(m) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes in
accordance with the provisions of Article III ((and to establish Classes of such
Series having relative rights, powers, and duties as the Trustees may provide
consistent with applicable laws)).
(n) To allocate assets, liabilities((,)) and expenses of the Trust to a
particular Series ((or Class, as appropriate)), or to apportion the same between
or among two or more Series ((or Classes, as appropriate)), provided that any
liabilities or expenses incurred by a particular Series ((or Class)) shall be
payable solely out of the assets belonging to that Series as provided for in
Article III.
(o) To consent to or participate in any plan for the reorganization,
consolidation((,)) or merger of any corporation or concern, any security of
which is held in the Trust; to consent to any contract, lease, mortgage,
purchase, or sale of property by such corporation or concern, and to pay
calls or subscriptions with respect to any security held in the Trust.
(p) To compromise, arbitrate, or otherwise adjust claims in favor of or
against the Trust or any matter in controversy((,)) including, but not limited
to, claims for taxes.
(q) To make distributions of income and of capital gains to Shareholders
in the manner hereinafter provided for.
(r) To borrow money [for temporary or emergency purposes and not for
investment purposes], and to pledge, mortgage((,)) or hypothecate the assets of
the Trust, subject to the applicable requirements of the 1940 Act.
(s) To establish, from time to time, a minimum total investment for
Shareholders[,] and to require the redemption of the Shares of any Shareholders
whose investment is less than such minimum upon giving notice to such
Shareholder.
6
<PAGE>
(((t) To operate as and carry on the business of an investment company and
to exercise all the powers necessary and appropriate to the conduct of such
operations.))
(((u) To interpret the investment policies, practices or limitations
of any Series.))
(((v) In general to carry on any other business in connection with or
incidental to any of the foregoing powers, to do everything necessary, suitable
or proper for the accomplishment of any purpose or the attainment of any object
or the furtherance of any power hereinbefore set forth, either alone or in
association with others, and to do every other act or thing incidental or
appurtenant to or growing out of or connected with the aforesaid business or
purposes, objects or powers.))
(((w) Notwithstanding any other provision hereof, to invest all of the
assets of any Series in a single open-end investment company, including
investment by means of transfer of such assets in exchange for an interest or
interests in such investment company.))
((The foregoing clauses shall be construed both as objects and powers, and
the foregoing enumeration of specific powers shall not be held to limit or
restrict in any manner the general powers of the Trustees. Any action by one or
more of the Trustees in their capacity as such hereunder shall be deemed an
action on behalf of the Trust or the applicable Series and not an action in an
individual capacity.))
((The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust or any Series or Class thereof.))
No one dealing with the Trustees shall be under any obligation to make any
inquiry concerning the authority of the Trustees, or to see to the application
of any payments made or property transferred to the Trustees or upon their
order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
SECTION 2. Any Trustee, officer or other agent of the Trust may acquire,
own and dispose of Shares to the same extent as if he were not a Trustee,
officer or agent; and the Trustees may issue and sell or cause to be issued and
sold Shares to and buy such Shares from any such person of any firm or company
in which he is interested, subject only to the general limitations herein
contained as to the sale and purchase of such Shares; and all subject to any
restrictions which may be contained in the Bylaws, ((if any)).
ACTION BY THE TRUSTEES
SECTION 3. [The] ((Except as otherwise provided herein or in the 1940 Act,
the)) Trustees shall act by majority vote at a meeting duly called or by
unanimous written consent without a meeting or by telephone consent provided a
quorum of Trustees participate in any such telephonic meeting, unless the 1940
Act requires that a particular action be taken only at a meeting [of] ((at which
the)) Trustees ((are present in person)). At any meeting of the Trustees, a
majority of the Trustees shall constitute a quorum. Meetings of the Trustees may
be called orally or in writing by the Chairman of the Trustees or by any two
other Trustees. Notice of the time, date, and [P]((p))lace of all meetings of
the Trustees shall be given by the party calling the meeting to each Trustee by
telephone, [or telegram] ((telefax, telegram, or other electro-mechanical
means)) sent to his home or business address at least twenty-four (((24))) hours
in advance of the meeting or by written notice mailed to his home or business
address at least seventy-two (((72))) hours in advance of the meeting. Notice
need not be given to any Trustee who attends the meeting without objecting to
the lack of notice or who executes a written waiver of notice with respect to
the meeting. Subject to the requirements of the 1940 Act, the Trustees by
majority vote may delegate to any one of their number their authority to approve
particular matters or take particular actions on behalf of the Trust. ((Written
consents or waivers of Trustees may be executed in one or more counterparts.
Execution of a written consent or waiver and delivery thereof to the Trust may
be accomplished by telefax or other electro-mechanical means.))
CHAIRMAN OF THE TRUSTEES
SECTION 4. The Trustees may appoint one of their number to be Chairman of
the Board of Trustees. The Chairman shall preside at all meetings of the
Trustees, shall be responsible for the execution of policies established by the
Trustees and the administration of the Trust, and may be the chief executive,
financial and accounting officer of the Trust.
7
<PAGE>
ARTICLE VI
EXPENSES OF THE TRUST
TRUSTEE REIMBURSEMENT
SECTION 1. Subject to the provisions of Article III, Section 5, the
Trustees shall be reimbursed from the Trust estate or the assets belonging to
the appropriate Series for their expenses and disbursements, including, without
limitation, fees and expenses of Trustees who are not Interested Persons of the
Trust[,]((;)) interest expense, taxes, fees and commissions of every
kind[,]((;)) expenses of pricing Trust portfolio securities; expenses of issue,
repurchase and redemption of shares including expenses attributable to a program
of periodic repurchases or redemptions, expenses of registering and qualifying
the Trust and its Shares under Federal and [S]((s))tate laws and
regulations[,]((;)) charges of custodians, transfer agents, and
registrars[,]((;)) expenses of preparing and setting up in type
[P]((p))rospectuses and [S]((s))tatements of [A]((a))dditional
[I]((i))nformation[,]((;)) expenses of printing and distributing prospectuses
sent to existing Shareholders[,]((;)) auditing and legal expenses[,]((;))
reports to Shareholders[,]((;)) expenses of meetings of Shareholders and proxy
solicitations therefor[,]((;)) insurance expense[,]((;)) association membership
dues; and for such non-recurring items as may arise, including litigation to
which the Trust is a party[,]((;)) and for all losses and liabilities by them
incurred in administering the Trust, and for the payment of such expenses,
disbursements, losses, and liabilities the Trustees shall have a lien on the
assets belonging to the appropriate Series prior to any rights or interests of
the Shareholders thereto. This section shall not preclude the Trust from
directly paying any of the aforementioned fees and expenses.
ARTICLE VII
INVESTMENT ADVISER, PRINCIPAL[,]UNDERWRITER, AND TRANSFER AGENT
INVESTMENT ADVISER
SECTION 1. Subject to a Majority Shareholder Vote, the Trustees may((,))
in their discretion and from time to time((,)) enter into an investment advisory
or management contract(s) with respect to the Trust or any Series thereof
whereby the other party(ies) to such contract(s) shall undertake to furnish the
Trustees such management, investment advisory, statistical, and research
facilities and services and such other facilities and services, if any, and all
upon such terms and conditions, as the Trustees may((,)) in their
discretion((,)) determine. Notwithstanding any provisions of this Declaration
of Trust, the may authorize the investment adviser(s) (subject to such general
or specific instructions as the Trustees may from time to time adopt) to effect
purchases, sales or exchanges of portfolio securities and other investment
instruments of the Trust on behalf of the Trustees or may authorize any officer,
agent, or Trustee to effect such purchases, sales, or exchanges pursuant to
recommendations of the investment adviser (and all without further action by the
Trustees). Any such purchases, sales((,)) and exchanges shall be deemed to have
been authorized by all of the Trustees.
The Trustees may, subject to applicable requirements of the 1940 Act, ((as
modified by or interpreted by any applicable order or orders of the Commission
or any rules or regulations adopted or interpretative releases of the Commission
thereunder)), including those relating to Shareholder approval, authorize the
investment adviser to employ one or more sub-advisers from time to time to
perform such of the acts and services of the investment adviser, and upon such
terms and conditions, as may be agreed upon between the investment adviser and
sub-adviser.
PRINCIPAL UNDERWRITER
SECTION 2. The Trustees may in their discretion from time to time enter
into [(a) contract(s)] ((an exclusive or non-exclusive contract(s) on behalf of
the Trust or any Series or Class thereof)) providing for the sale of the Shares,
whereby the Trust may either agree to sell the Shares to the other party to the
contract or appoint such other party its sales agent for such Shares. In either
case, the contract shall be on such terms and conditions as may be prescribed in
the Bylaws, if any, and such further terms and conditions as the Trustees may,
in their discretion, determine not inconsistent with the provisions of this
Article VII or of the Bylaws, if any[; and such]((.)) ((Such)) contract may also
provide for the repurchase or sale of Shares by such other party as principal or
as agent of the Trust.
8
<PAGE>
TRANSFER AGENT
SECTION 3. The Trustees may((,)) in their discretion and from time to
time, enter into [a] ((one or more)) transfer agency and Shareholder service
contract((s)) whereby the other party shall undertake to furnish the Trustees
with transfer agency and Shareholder services. [The contract] ((Such contracts))
shall be on such terms and conditions as the Trustees may((,)) in their
discretion((,)) determine not inconsistent with the provisions of this
Declaration of Trust or of the Bylaws, if any. Such services may be provided by
one or more entities.
PARTIES TO CONTRACT
SECTION 4. Any contract of the character described in Sections 1, 2 and 3
of this Article VII or in Article IX hereof may be entered into with any
corporation, firm, partnership, trust or association, although one or more of
the Trustees or officers of the Trust may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any
relationship, nor shall any person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was
reasonable and fair and not inconsistent with the provisions of this Article VII
or the Bylaws, if any. The same person (including a firm, corporation,
partnership, trust, or association) may be the other party to contracts entered
into pursuant to Sections 1, 2 and 3 above or Article IX, and any individual may
be financially interested or otherwise affiliated with persons who are parties
to any or all of the contracts mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
SECTION 5. Any contract entered into pursuant to Sections 1 and 2 of this
Article VII shall be consistent with and subject to the requirements of Section
15 of the 1940 Act [(including any amendments thereof or other applicable Act of
Congress hereafter enacted)], ((as modified by or interpreted by any applicable
order or orders of the Commission or any rules or regulations adopted or
interpretative releases of the Commission (or other applicable Act of Congress
hereafter enacted))), with respect to its continuance in effect, ((its
amendment)), its termination, and the method of authorization and approval of
such contract or renewal thereof [, and no amendment to any contract, entered
into pursuant to Section 1 shall be effective unless assented to by a Majority
Shareholder Vote].
ARTICLE VIII
SHAREHOLDERS' VOTING POWERS AND MEETINGS
VOTING POWERS
SECTION 1. The Shareholders shall have power to vote [(i)] (((a))) for the
election of Trustees as provided in Article IV, Section 2[,]((;)) [(ii)] (((b)))
for the removal of Trustees as provided in Article IV, Section 3(d) [,(iii)]((;
(c))) with respect to any investment advisory or management contract as provided
in Article VII, Section((s)) 1 ((and 5)) [, (iv)]((; (d) with respect to any
termination, merger, consolidation, reorganization, or sale of assets of the
Trust or any of its Series or Classes as provided in Article XII, Section 4;
(e))) with respect to the amendment of this Declaration of Trust as provided in
Article XII, Section 7[,(v)]((; (f))) to the same extent as the shareholders of
a Massachusetts business corporation, as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders, provided, however, that a
Shareholder of a particular Series shall not be entitled to bring any derivative
or class action on behalf of any other Series of the Trust[, and (vi)]; ((and
(g))) with respect to such additional matters relating to the Trust as may be
required or authorized by law, by this Declaration of Trust, or the Bylaws of
the Trust, if any, or any registration of the Trust with the [Securities and
Exchange Commission (the "Commission")] ((Commission)) or any [S]((s))tate, as
the Trustees may consider desirable.
On any matter submitted to a vote of the Shareholders, all [s]((S))hares
shall be voted by individual Series, ((except as provided in the following
sentence and)) except [(i)] (((a))) when required by the 1940 Act, Shares shall
be voted in the aggregate and not by individual Series; and [(ii)] (((b))) when
9
<PAGE>
the Trustees have determined that the matter affects only the interests of one
or more Series, then only the Shareholders of such Series shall be entitled to
vote thereon. ((The Trustees may also determine that a matter affects only the
interests of one or more Classes of a Series, in which case, any such matter
shall be voted on by such Class or Classes.)) A Shareholder of each
[s]((S))eries ((or Class thereof)) shall be entitled to one vote for each dollar
of net asset value (number of Shares owned times net asset value per share) of
such [series,] ((Series or Class thereof)) on any matter on which such
[s]((S))hareholder is entitled to vote, and each fractional dollar amount shall
be entitled to a proportionate fractional vote. There shall be no cumulative
voting in the election of Trustees. Shares may be voted in person or by proxy.
Until Shares are issued, the Trustees may exercise all rights of Shareholders
and may take any action required or permitted by law, this Declaration of Trust
or any Bylaws of ((the)) Trust((, if any,)) to be taken by Shareholders.
MEETINGS
SECTION 2. The first Shareholders' meeting shall be held as specified in
Section 2 of Article IV at the principal office of the Trust or such other place
as the Trustees may designate. Special meetings of the Shareholders of any
Series may be called by the Trustees and shall be called by the Trustees upon
the written request of Shareholders owning at least one-tenth (((1/10))) of the
outstanding Shares entitled to vote. Whenever ten or more Shareholders meeting
the qualifications set forth in Section 16(c) of the 1940 Act, [as the same may
be amended from time to time,] ((as modified by or interpreted by any applicable
order or orders of the Commission or any rules or regulations adopted or
interpretative releases of the Commission)), seek the opportunity of furnishing
materials to the other Shareholders with a view to obtaining signatures on such
a request for a meeting, the Trustees shall comply with the provisions of said
Section 16(c) with respect to providing such Shareholders access to the list of
the Shareholders of record of the Trust or the mailing of such materials to such
Shareholders of record. Shareholders shall be entitled to at least fifteen
(((15))) days' notice of any meeting.
QUORUM AND REQUIRED VOTE
SECTION 3. A majority of Shares entitled to vote in person or by proxy
shall be a quorum for the transaction of business at a Shareholders' meeting,
except that where any provision of law or of this Declaration of Trust permits
or requires that holders of any Series ((or Class)) shall vote as a Series [,]
((or Class)) then a majority of the aggregate number of Shares of that Series
((or Class)) entitled to vote shall be necessary to constitute a quorum for the
transaction of business by that Series ((or Class)). Any lesser number shall be
sufficient for adjournments. Any adjourned session or sessions may be held,
within a reasonable time after the date set for the original meeting, without
the necessity of further notice. Except when a larger vote is required ((by
applicable law or)) by any provision of this Declaration of Trust or the Bylaws,
((if any,)) a majority of the Shares voted in person or by proxy shall decide
any questions and a plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or requires that the
holders of any Series ((or Class)) shall vote as a Series ((or Class)), then a
majority of the Shares of that Series ((or Class)) voted on the matter shall
decide that matter insofar as that Series ((or Class)) is concerned.
((Shareholders may act by unanimous written consent. Actions taken by a Series
or Class may be consented to unanimously in writing by Shareholders of that
Series or Class.))
ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
SECTION 1. The Trustees shall at all times employ a bank [or], ((a company
that is a member of a national securities exchange,)) trust company, ((or other
entity permitted under the 1940 Act, as modified by or interpreted by any
applicable order or orders of the Commission or any rules or regulations adopted
or interpretative releases of the Commission thereunder)), having capital,
surplus, and undivided profits of at least two million dollars ($2,000,000), or
such other amount [or such other entity] as shall be allowed by the Commission
or by the 1940 Act, as custodian with authority as its agent, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in the Bylaws of the Trust((, if any)):
(1) to hold the securities owned by the Trust and deliver the same upon
written order or oral order, if confirmed in writing, or by such
electro-mechanical or electronic devices as are agreed to by the Trust and
the custodian, if such procedures have been authorized in writing by the
Trust;
10
<PAGE>
(2) to receive and receipt for any moneys due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may
direct; and
(3) to disburse such funds upon orders or vouchers;
and the Trust may also employ such custodian as its agent:
(1) to keep the books and accounts of the Trust and furnish clerical
and accounting services; and
(2) to compute, if authorized to do so [by the Trustees], the Net Asset
Value of any Series ((or Class thereof)) in accordance with the provisions
hereof; all upon such basis of compensation as may be agreed upon between
the Trustees and the custodian. [If so directed by a Majority Shareholder
Vote, the custodian shall deliver and pay over all the property of the
Trust held by it as specified in such vote.]
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian, and upon such terms and conditions, as may be agreed upon between the
custodian[s] and such sub-custodian and approved by the Trustees, provided that
in every case such sub-custodian shall be a bank((, a company that is a member
of a national securities exchange,)) [or] trust company [organized under the
laws of the United States or one of the States thereof and], ((or other entity
permitted under the 1940 Act, as modified by or interpreted by any applicable
order or orders of the Commission or any rules or regulations adopted or
interpretative releases of the Commission thereunder,)) having capital, [and]
surplus, and undivided profits of at least two million dollars ($2,000,000), or
such other [person] ((amount)) as [may] ((shall)) be [permitted] ((allowed)) by
the Commission [, or otherwise in accordance with the 1940 Act as from time to
time amended] ((or by the 1940 Act)).
CENTRAL [CERTIFICATE]((DEPOSITORY)) SYSTEM
SECTION 2. Subject to such rules, regulations and orders as the Commission
may adopt, the Trustees may direct the custodian to deposit all or any part of
the securities owned by the Trust in a system for the central handling of
securities established by a national securities exchange or a national
securities association registered with the Commission under the Securities
Exchange Act of 1934[,] or such other person as may be permitted by the
Commission[,] or otherwise in accordance with the 1940 Act [as from time to time
amended], pursuant to which system all securities of any particular class or
series of any issuer deposited within the system are treated as fungible and may
be transferred or pledged by bookkeeping entry without physical delivery of such
securities[,] provided that all such deposits shall be subject to withdrawal
only upon the order of the Trust ((or its custodian, subcustodians, or other
authorized agents)).
ARTICLE X
DISTRIBUTIONS,[AND] REDEMPTIONS AND DETERMINATION OF NET ASSET VALUE
DISTRIBUTIONS
SECTION 1.
(a) The Trustees may from time to time declare and pay dividends.
The amount of such dividends and the payment of them shall be wholly in
the discretion of the Trustees.
(b) The Trustees shall have ((the)) power, to the fullest extent
permitted by the laws of Massachusetts, at any time to declare and cause
to be paid dividends on Shares of a particular Series, from the assets
belonging to that Series, which dividends, at the election of the
Trustees, may be paid daily or otherwise pursuant to a standing resolution
or resolutions adopted only once or with such frequency as the Trustees
may determine, and may be payable in Shares of that Series, ((or Classes
thereof)), at the election of each Shareholder of that Series.
11
<PAGE>
((The Trustees may adopt and offer to Shareholders such dividend
reinvestment plans, cash dividend payout plans, or related plans as the
Trustees shall deem appropriate.))
(c) Anything in this instrument to the contrary notwithstanding, the
Trustees may at any time declare and distribute ((a stock dividend)) pro
rata among the Shareholders of a particular Series, ((or Class thereof)),
as of the record date of that Series ((or Class)) fixed as provided in
((Article XII)), Section 3 [hereof a "stock divided"].
REDEMPTIONS
SECTION 2. In case any holder of record of Shares of a particular Series
((or Class of a Series)) desires to dispose of his Shares, he may deposit at the
office of the transfer agent or other authorized agent of that Series a written
request or such other form of request as the Trustees may, from time to time,
authorize, requesting that the Series purchase the Shares in accordance with
this Section 2; and the Shareholder so requesting shall be entitled to require
the Series to purchase, and the Series or the principal underwriter of the
Series shall purchase his said Shares, but only at the Net Asset Value thereof
(as described in Section 3 hereof). The Series shall make payment for any such
Shares to be redeemed, as aforesaid, in cash or property from the assets of that
Series((,)) and payment for such Shares ((less any applicable deferred sales
charges and/or fees)) shall be made by the Series or the principal underwriter
of the Series to the Shareholder of record within seven (7) days after the date
upon which the request is effective.
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
SECTION 3. The term "Net Asset Value" of any Series ((or Class)) shall
mean that amount by which the assets of that Series[,] ((or Class)) exceed its
liabilities, all as determined by or under the direction of the Trustees. Such
value per Share shall be determined separately for each Series ((or Class)) of
Shares and shall be determined on such days and at such times as the Trustees
may determine. Such determination shall be made with respect to securities for
which market quotations are readily available, at the market value of such
securities; and with respect to other securities and assets, at the fair value
as determined in good faith by the Trustees, provided, however, that the
Trustees, without Shareholder approval, may alter the method of appraising
portfolio securities insofar as permitted under the 1940 Act and the rules,
regulations, and interpretations thereof promulgated or issued by the Commission
or insofar as permitted by any [O]((o))rder of the Commission applicable to the
Series. The Trustees may delegate any of its powers and duties under this
Section 3 with respect to appraisal of assets and liabilities. At any time, the
Trustees may cause the value [par]((per)) Share last determined to be determined
again in a similar manner and may fix[,] the time when such redetermined value
shall become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
SECTION 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940 Act. Such
suspension shall take effect at such time as the Trustees shall specify((,)) but
not later than the close of business on the business day next following the
declaration of suspension, and thereafter there shall be no right of redemption
or payment until the Trustees shall declare the suspension at an end. In the
case of a suspension of the right of redemption, a Shareholder may either
withdraw his request for redemption or receive payment based on the Net Asset
Value per Share existing after the termination of the suspension. ((In the event
that any Series is divided into Classes, the provisions of this Section, to the
extent applicable as determined in the discretion of the Trustees and consistent
with applicable law, may be equally applied to each such Class.))
ARTICLE XI
LIMITATION OF LIABILITY AND INDEMNIFICATION
((LIMITATION OF LIABILITY))
SECTION 1. Provided they have exercised reasonable care and have acted
under the reasonable belief that their actions are in the best interest of the
Trust, the Trustees shall not be responsible for or liable in any event for
12
<PAGE>
neglect or wrongdoing of them or any officer, agent, employee, or investment
adviser of the Trust, but nothing contained herein shall protect any Trustee
against any liability to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence((,)) or reckless disregard of
the duties involved in the conduct of his office.
INDEMNIFICATION ((OF COVERED PERSONS))
SECTION 2.
(a) Subject to the exceptions and limitations contained in Section
(b) below:
(i) every person who is, or has been, a Trustee or officer of
the Trust (hereinafter referred to as "Covered Person") shall be
indemnified by the appropriate Series to the fullest extent
permitted by law against liability and against all expenses
reasonably incurred or paid by him in connection with any claim,
action, suit((,)) or proceeding in which he becomes involved as a
party or otherwise by virtue of his being or having been a Trustee
or officer and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or "proceeding"
shall apply to all claims, actions, suits or proceedings (civil,
criminal or other, including appeals), actual or threatened while in
office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Covered
Person:
(i) who shall have been adjudicated by a court or body before
which the proceeding was brought (A) to be liable to the Trust or
its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the
conduct of his office; or (B) not to have acted in good faith in the
reasonable belief that his action was in the best interest of the
Trust; or
(ii) in the event of a settlement, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence, or reckless disregard of
the duties involved in the conduct of his office,
(A) by the court or other body approving the settlement;
(B) by at least a majority of those Trustees who are neither
[i]((I))nterested Persons of the Trust nor are parties to the matter
based upon a review of readily available facts (as opposed to a full
trial-type inquiry); or
(C) by written opinion of independent legal counsel based upon
a review of readily available facts (as opposed to a full trial-type
inquiry);
provided, however, that any Shareholder may, by appropriate legal
proceedings, challenge any such determination by the Trustees, or by
independent counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
be exclusive of or affect any other rights to which any Covered Person may
now or hereafter be entitled, shall continue as to a person who has ceased
to be such Trustee or officer((,)) and shall inure to the benefit of the
heirs, executors((,)) and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which Trust
personnel, other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and presentation of
a defense to any claim, action, suit, or proceeding of the character
described in [p]((P))aragraph (a) of this Section 2 may be paid by the
applicable Series from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person that
13
<PAGE>
such amount will be paid over by him to the applicable Series if it is
ultimately determined that he is not entitled to indemnification under
this Section 2; provided, however, that either [a](((i))) such Covered
Person shall have provided appropriate security for such
undertaking[,]((;)) [(b)](((ii))) the Trust is insured against losses
arising out of any such advance payments[,]((;)) or [(c)](((iii))) either
a majority of the Trustees who are neither interested persons of the Trust
nor parties to the matter, or independent legal counsel in a written
opinion, shall have determined, based upon a review of readily available
facts (as opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found entitled
to indemnification under this Section 2.
INDEMNIFICATION OF SHAREHOLDERS
SECTION 3. In case any Shareholder or former Shareholder of any Series of
the Trust shall be held to be personally liable solely by reason of his being or
having been a Shareholder and not because of his acts or omissions or for some
other reason, the Shareholder or former Shareholder (or his heirs, executors,
administrators((,)) or other legal representatives or((,)) in the case of a
corporation other entity, its corporate or other general successor) shall be
entitled out the assets belonging to the applicable Series to be held harmless
from and against all loss and expense arising from such liability. The Series
shall, upon request by the Shareholder, assume the defense of any claim made
against the Shareholder for any act or obligation of the Series and satisfy any
judgment thereon.
ARTICLE XII
MISCELLANEOUS
TRUST NOT A PARTNERSHIP((, ETC.))
SECTION 1. It is hereby expressly declared that a trust [and not a
partnership] is created hereby ((and not a partnership, joint stock association,
corporation, bailment, or any form of a legal relationship other than a trust)).
No Trustee hereunder shall have any power to [bind] personally ((bind)) either
the Trust's officers or any Shareholder. All persons extending credit to,
contracting with, or having any claim against the Trust or the Trustees shall
look only to the assets of the appropriate Series for payment under such credit,
contract, or claim; and neither the Shareholders nor the Trustees, nor any of
their agents, whether past, present, or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect a Trustee against
any liability to which the Trustee would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence((,)) or reckless disregard of
the duties involved in the conduct of the office of Trustee hereunder.
TRUSTEES' GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
SECTION 2. The exercise by the Trustees of their powers and discretions
hereunder in good faith and with reasonable care under the circumstances then
prevailing, shall be binding upon everyone interested. Subject to the provisions
of Section 1 of this Article XII and to Article XI, the Trustees shall not be
liable for errors of judgment or mistakes of fact or law. The Trustees may take
advice of counsel or other experts with respect to the meaning and operation of
this Declaration of Trust, and subject to the provisions of Section 1 of this
Article XII and to Article XI, shall be under no liability for any act or
omission in accordance with such advice or for failing to follow such advice.
The Trustees shall not be required to give any bond as such, nor any surety if a
bond is obtained.
ESTABLISHMENT OF RECORD DATES
SECTION 3. The Trustees may close the stock transfer books of the Trust
for a period not exceeding sixty (60) days preceding the date of any meeting of
Shareholders, or the date for the payment of any dividends, or the date for the
allotment of rights, or the date when any change or conversion or exchange of
Shares shall go into effect; or in lieu of closing the stock transfer books as
aforesaid, the Trustees may fix in advance a date not exceeding sixty (60) days
preceding the date of any meeting of Shareholders, or the date for payment of
any dividends((,)) or the date for the allotment of rights, or the date when any
change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, and to
vote at, any such meeting, or entitled to receive payment of any such dividend,
or to any such allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record on
the date so fixed shall be entitled to such notice of, and to vote at, such
14
<PAGE>
meeting, or to receive payment of such dividend, or to receive such allotment or
rights, or to exercise such rights, as the case may be, notwithstanding any
transfer of any Shares on the books of the Trust after any such record date
fixed or aforesaid.
((DURATION;))TERMINATION OF TRUST ((, A SERIES OR A CLASS; MERGERS, ETC.))
[Section 4] [(a)] ((SECTION 4.1. DURATION.)) The Trust shall continue
without limitation of time, but subject to the provisions [of subsection (b)] of
this [Section 4]((Article XII)).
[(b)](( SECTION 4.2. TERMINATION OF THE TRUST, A SERIES OR A CLASS.))
[Subject to a Majority Shareholder Vote of each Series affected by the matter
or, if applicable, to a Majority Shareholder Vote of the Trust, the Trustees
may
(i) sell and convey the assets of the Trust or any affected Series
to another trust, partnership, association or corporation organized under
the laws of any state which is a diversified open-end management
investment company as defined in the 1940 Act, for adequate consideration
which may include the assumption of all outstanding obligations, taxes and
other liabilities, accrued or contingent, of the Trust or any affected
Series, and which may include shares of beneficial interest or stock of
such trust, partnership, association or corporation; or
(ii) at any time sell and convert into money all of the Assets of
the Trust or any affected Series.
Upon making provision for the payment of all liabilities in either (i) or
(ii), by such assumption or otherwise, the Trustees shall distribute the
remaining proceeds or assets (as the case may be) ratably among the holders of
the Shares of the Trust or any affected Series then outstanding.
(c) Upon completion of the distribution of the remaining proceeds or the
remaining assets as provided in sub-section (b), the Trust or any affected
Series shall terminate and the Trustees shall be discharged of any and all
further liabilities and duties hereunder and the right, title and interest of
all parties shall be cancelled and discharged.]
(((a) Subject to applicable Federal and state law, the Trust or any Series
or Class thereof may be terminated (i) by Majority Shareholder Vote of the
Trust, each Series affected, or each Class affected, as the case may be; or (ii)
without the vote or consent of Shareholders by a majority of the Trustees either
at a meeting or by written consent. The Trustees shall provide written notice to
the affected Shareholders of a termination effected under clause (ii) above.
Upon the termination of the Trust or the Series or Class,))
(((i) the Trust or the Series or Class shall carry on no
business except for the purpose of winding up its affairs;))
(((ii) the Trustees shall proceed to wind up the affairs of the
Trust or the Series or Class, and all of the powers of the Trustees under
this Declaration of Trust shall continue until the affairs of the Trust
shall have been wound up, including the power to fulfill or discharge the
contracts of the Trust or the Series or Class thereof; collect its assets;
sell, convey, assign, exchange, transfer, or otherwise dispose of all or
any part of the remaining Trust property or Trust property allocated or
belonging to such Series or Class to one or more persons at public or
private sale for consideration that may consist in whole or in part of
cash, securities, or other property of any kind; discharge or pay its
liabilities; and do all other acts appropriate to liquidate its business;
provided that any sale, conveyance, assignment, exchange, transfer, or
other disposition of all or substantially all the Trust property or Trust
property allocated or belonging to such Series or Class (other than as
provided in (iii) below) shall require Shareholder approval in accordance
with Section 4.3 below; and))
(((iii) after paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities, and refunding
agreements as they deem necessary for their protection, the Trustees may
distribute the remaining Trust property or the remaining property of the
terminated Series or Class, in cash or in kind or partly each, among the
Shareholders of the Trust or the Series or Class according to their
respective rights; and))
(((b) after termination of the Trust or the Series or Class and distribution
to the Shareholders as herein provided, a majority of the Trustees shall execute
and lodge among the records of the Trust and file with the Secretary of The
Commonwealth of Massachusetts, as appropriate, an instrument in writing setting
15
<PAGE>
forth the fact of such termination, and the Trustees shall thereupon be
discharged from all further liabilities and duties with respect to the Trust or
the terminated Series or Class, and the rights and interests of all Shareholders
of the Trust or the terminated Series or Class shall thereupon cease.))
((SECTION 4.3. MERGER, CONSOLIDATION, AND SALE OF ASSETS. Subject to
applicable Federal and state law and except as otherwise provided in Section 4.4
below, the Trust or any Series thereof may merge or consolidate with any other
corporation, association, trust, or other organization or may sell, lease, or
exchange all or substantially all of the Trust property or Trust property
allocated or belonging to such Series, including its good will, upon such terms
and conditions and for such consideration when and as authorized at any meeting
of Shareholders called for such purpose by a Majority Shareholder Vote of the
Trust or affected Series, as the case may be. Any such merger, consolidation,
sale, lease, or exchange shall be deemed for all purposes to have been
accomplished under and pursuant to Massachusetts law.))
((SECTION 4.4. INCORPORATION; REORGANIZATION. Subject to applicable Federal
and state law, the Trustees may without the vote or consent of Shareholders
cause to be organized or assist in organizing a corporation or corporations
under the laws of any jurisdiction or any other trust, partnership, limited
liability company, association, or other organization to take over all of the
Trust property or the Trust property allocated or belonging to such Series or to
carry on any business in which the Trust shall directly or indirectly have any
interest, and to sell, convey and transfer the Trust property or the Trust
property allocated or belonging to such Series to any such corporation, trust,
limited liability company, partnership, association, or organization in exchange
for the shares or securities thereof or otherwise, and to lend money to,
subscribe for the shares or securities of, and enter into any contracts with any
such corporation, trust, partnership, limited liability company, association, or
organization, or any corporation, partnership, limited liability company, trust,
association, or organization in which the Trust or such Series holds or is about
to acquire shares or any other interest. Subject to applicable Federal and state
law, the Trustees may also cause a merger or consolidation between the Trust or
any successor thereto and any such corporation, trust, partnership, limited
liability company, association, or other organization. Nothing contained herein
shall be construed as requiring approval of Shareholders for the Trustees to
organize or assist in organizing one or more corporations, trusts, partnerships,
limited liability companies, associations, or other organizations and selling,
conveying, or transferring the Trust property or a portion of the Trust property
to such organization or entities; provided, however, that the Trustees shall
provide written notice to the affected Shareholders of any transaction whereby,
pursuant to this Section 4.4, the Trust or any Series thereof sells, conveys, or
transfers substantially all of its assets to another entity or merges or
consolidates with another entity.))
FILING OF COPIES, REFERENCES, AND HEADINGS
SECTION 5. The original or a copy of this instrument and of each
[declaration of trust]((Declaration of Trust)) supplemental hereto shall be kept
at the office of the Trust where it may be inspected by any Shareholder. A copy
of this instrument and of each supplemental [declaration of trust]((Declaration
of Trust)) shall be filed by the Trustees with the Secretary of The Commonwealth
of Massachusetts and the Boston City Clerk, as well as any other governmental
office where such filing may from time to time be required. Anyone dealing with
the Trust may rely on a certificate by an officer or Trustee of the Trust as to
whether or not any such supplemental [declarations of trust]((Declarations of
Trust)) have been made and as to any matters in connection with the Trust
hereunder, and with the same effect as if it were the original, may rely on a
copy certified by an officer or Trustee of the Trust to be a copy of this
instrument or of any such supplemental [declaration of trust]((Declaration of
Trust)). In this instrument or in any such supplemental [declaration of
trust]((Declaration of Trust)), references to this instrument and all
expressions like "herein," "hereof" and "hereunder," shall be deemed to refer to
this instrument as amended or affected by any such supplemental [declaration of
trust]((Declaration of Trust)). Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument, rather
than the headings, shall control. This instrument may be executed in any number
of counterparts each of which shall be deemed an original.
APPLICABLE LAW
SECTION 6. The [t]((T))rust set forth in this instrument is made in
[t]((T))he Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a Massachusetts
business trust, and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust((, and the
absence of a specific reference herein to any such power, privilege, or action
shall not imply that the Trust may not exercise such power or privilege or take
such actions)).
16
<PAGE>
AMENDMENTS
[Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by applicable law
or this Declaration of Trust in any particular case, the Trustees shall amend or
otherwise supplement this instrument, by making a declaration of trust
supplemental hereto, which thereafter shall form a part hereof, except that an
amendment which shall affect the Shareholders of one or more Series but not the
Shareholders of all outstanding Series shall be authorized by vote of the
Shareholders holding a majority of the Shares entitled to vote of each Series
affected and no vote of Shareholders of a Series not affected shall be required.
Amendments having the purpose of changing the name of the Trust or of supplying
any omission, curing any ambiguity or curing, correcting or supplementing any
defective or inconsistent provision contained herein shall not require
authorization by Shareholder vote. Copies of the supplemental declaration of
trust shall be filed as specified in Section 5 of this Article XII.] ((SECTION
7. Except as specifically provided herein, the Trustees may, without shareholder
vote, amend or otherwise supplement this Declaration of Trust by making an
amendment, a Declaration of Trust supplemental hereto or an amended and restated
Declaration of Trust. Shareholders shall have the right to vote (a) on any
amendment that would affect their right to vote granted in Section 1 of Article
VIII; (b) on any amendment that would alter the maximum number of Trustees
permitted under Section 6 of Article IV; (c) on any amendment to this Section 7;
(d) on any amendment as may be required by law or by the Trust's registration
statement filed with the Commission; and (e) on any amendment submitted to them
by the Trustees. Any amendment required or permitted to be submitted to
Shareholders that, as the Trustees determine, shall affect the Shareholders of
one or more Series or Classes shall be authorized by vote of the Shareholders of
each Series or Class affected and no vote of shareholders of a Series or Class
not affected shall be required. Notwithstanding anything else herein, any
amendment to Article XI shall not limit the rights to indemnification or
insurance provided therein with respect to action or omission of Covered Persons
prior to such amendment.))
FISCAL YEAR
SECTION 8. The fiscal year of the Trust shall end on a specified date as
set forth in the Bylaws, ((if any,)) provided, however, that the Trustees may,
without Shareholder approval, change the fiscal year of the Trust.
USE OF THE WORD "FIDELITY"
SECTION 9. Fidelity Management & Research Company ("FMR") has consented to
the use by any Series of the Trust of the identifying word "Fidelity" in the
name of any Series of the Trust at some future date. Such consent is conditioned
upon the employment of FMR ((or a subsidiary or affiliate thereof)) as
investment adviser of each Series of the Trust. As between the Trust and itself,
FMR controls the use of the name of the Trust insofar as such name contains the
identifying word "Fidelity[".]((.")) FMR may from time to time use the
identifying word "Fidelity" in other connections and for other purposes,
including, without limitation, in the names of other investment companies,
corporations, or businesses [which]((that)) it may manage, advise, sponsor or
own or in which it may have a financial interest. FMR may require the Trust or
any Series thereof to cease using the identifying word "Fidelity" in the name of
the Trust or any Series thereof if the Trust or any Series thereof ceases to
employ FMR or a subsidiary or affiliate thereof as investment adviser.
((PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS))
((SECTION 10. (a) The provisions of this Declaration of Trust are
severable, and, if the Trustees shall determine, with the advice of counsel,
that any of such provisions is in conflict with the 1940 Act, the regulated
investment company provisions of the Internal Revenue Code or with other
applicable laws and regulations, the conflicting provision shall be deemed never
to have constituted a part of this Declaration of Trust; provided, however, that
such determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.))
(((b) If any provision of this Declaration Trust shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provisions in any other jurisdiction or any other provision of this
Declaration of Trust in any jurisdiction.))
IN WITNESS WHEREOF, the undersigned, being all of the Trustees of the
Trust, have executed this instrument [this 17th day of March, 1994] ((as of the
date set forth above)).
17
<PAGE>
[SIGNATURE LINES OMITTED]
<PAGE>
EXHIBIT 2
EDGAR DESCRIPTION NO. 1 - FOR STAND ALONE FUND STRUCTURE
The "Stand Alone Fund Structure" diagram contains three circles labeled
"Individual Fund A-1 (Managed by FMR)," "Individual Fund A-2 (Managed by FMR),"
and "Individual Fund A-3 (Managed by FMR)," respectively. Above each circle
attached by a line is a single rectangular box. The three rectangular boxes are
labeled "Retail Investors," "Institutional Investors," and "Retirement
Investors," respectively.
EDGAR DESCRIPTION NO. 2 - FOR MASTER FEEDER FUND STRUCTURE
The "Master Feeder Fund Structure" diagram contains a single circle labeled
"Master Fund (Managed by FMR)." Surrounding the circle attached by lines are
three square boxes labeled "Feeder Fund A-1," "Feeder Fund A-2," and "Feeder
Fund A-3," respectively. Attached to each square box by a line is a single
rectangular box. The three rectangular boxes are labeled "Retail Investors,"
"Institutional Investors," and Retirement Investors," respectively.
<PAGE>
EXHIBIT 3
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY FIXED-INCOME TRUST:
{NAME OF EACH PORTFOLIO OMITTED}
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[Modification] ((AMENDMENT)) made this [1st] ((__)) day of [November 1993]
((______ 1999)), by and between Fidelity Fixed-Income Trust, a Massachusetts
business trust which may issue one or more series of shares of beneficial
interest (hereinafter called the "Fund"), on behalf of {NAME OF EACH PORTFOLIO
OMITTED} (hereinafter called the "Portfolio"), and Fidelity Management &
Research Company, a Massachusetts corporation (hereinafter called the "Adviser")
((as set forth in its entirety below)).
Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, and the Adviser hereby
consent, pursuant to Paragraph 6 of the existing Management Contract [dated
November 1, 1989/modified September 1, 1992] ((dated November 1, 1993)), to a
modification of said Contract in the manner set forth below. The [Modified]
((Amended)) Management Contract shall, when executed by duly authorized officers
of the Fund and the Adviser, take effect on [the later of November 1, 1993 or
the first day of the month following approval:] ((_______, 1999.))
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision of the
Fund's Board of Trustees, direct the investments of the Portfolio in accordance
with the investment objective, policies and limitations as provided in the
Portfolio's Prospectus or other governing instruments, as amended from time to
time, the Investment Company Act of 1940 and rules thereunder, as amended from
time to time (the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also furnish for
the use of the Portfolio office space and all necessary office facilities,
equipment and personnel for servicing the investments of the Portfolio; and
shall pay the salaries and fees of all officers of the Fund, of all Trustees of
the Fund who are "interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell, lend
and otherwise trade in any stocks, bonds and other securities and investment
instruments on behalf of the Portfolio. The investment policies and all other
actions of the Portfolio are and shall at all times be subject to ((the))
control and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative services
necessary for the operation of the Fund. The Adviser shall, subject to the
supervision of the Board of Trustees, perform various services for the
Portfolio, including but not limited to: (i) providing the Portfolio with office
space, equipment and facilities (which may be its own) for maintaining its
organization; (ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and pricing
agents, accountants, attorneys, underwriters, brokers and dealers, insurers and
other persons in any capacity deemed to be necessary or desirable; (iii)
preparing all general shareholder communications, including shareholder reports;
(iv) conducting shareholder relations; (v) maintaining the Fund's existence and
its records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal and
state law; and (vii) investigating the development of and developing and
implementing, if appropriate, management and shareholder services designed to
enhance the value or convenience of the Portfolio as an investment vehicle.
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time to
time or as the Adviser may deem to be desirable. The Adviser shall make
<PAGE>
recommendations to the Fund's Board of Trustees with respect to Fund policies,
and shall carry out such policies as are adopted by the Trustees. The Adviser
shall, subject to review by the Board of Trustees, furnish such other services
as the Adviser shall from time to time determine to be necessary or useful to
perform its obligations under this Contract.
(c) The Adviser [, at its own expense,] shall place all orders for the
purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Adviser, which may include brokers or dealers
affiliated with the Adviser. The Adviser shall use its best efforts to seek to
execute portfolio transactions at prices which are advantageous to the Portfolio
and at commission rates which are reasonable in relation to the benefits
received. In selecting brokers or dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Portfolio and/or the other accounts over which the
Adviser or its affiliates exercise investment discretion. The Adviser is
authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Portfolio
which is in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction if the Adviser determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction or
the overall responsibilities which the Adviser and its affiliates have with
respect to accounts over which they exercise investment discretion. The Trustees
of the Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and stockholders of the Adviser are or
may be or become similarly interested in the Fund, and that the Adviser may be
or become interested in the Fund as a shareholder or otherwise.
3. The Adviser will be compensated on the following basis for the services
and facilities to be furnished hereunder. The Adviser shall receive a monthly
management fee, payable monthly as soon as practicable after the last day of
each month, composed of a Group [fee rate] ((Fee)) and an Individual Fund [fee
rate] ((Fee)).
(a) Group Fee Rate. The Group [f]((F))ee [r]((R))ate shall be based upon
the monthly average of the net assets of the registered investment companies
having Advisory and Service or Management Contracts with the Adviser (computed
in the manner set forth in the [charter of each investment company] ((Fund's
Declaration of Trust or other organizational document))) determined as of the
close of business on each business day throughout the month. The Group
[f]((F))ee [r]((R))ate shall be determined on a cumulative basis pursuant to the
following schedule[.]((:))
Average Net Assets Annualized Fee Rate (((for each level)))
- ------------------ ----------------------------------------
0 - $ 3 billion .370((0))%
3 - 6 .340((0))
6 - 9 .310((0))
9 - 12 .280((0))
12 - 15 .250((0))
15 - 18 .220((0))
2
<PAGE>
18 - 21 .200((0))
21 - 24 .190((0))
24 - 30 .180((0))
30 - 36 .175((0))
36 - 42 .170((0))
42 - 48 .165((0))
48 - 66 .160((0))
66 - 84 .155((0))
84 - 120 .150((0))
[120 - 174] [ .145%]
[Over 174] [ .140%]
((120 - 156)) ((.1450))
((156 - 192)) ((.1400))
((192 - 228)) ((.1350))
((228 - 264)) ((.1300))
((264 - 300)) ((.1275))
((300 - 336)) ((.1250))
((336 - 372)) ((.1225))
((372 - 408)) ((.1200))
((408 - 444)) ((.1175))
((444 - 480)) ((.1150))
((480 - 516)) ((.1125))
((Over 516)) ((.1100))
(b) Individual Fund Fee Rate. The Individual Fund [f]((F))ee [r]((R))ate
shall be ((0)).30%.
The sum of the Group [f]((F))ee [r]((R))ate, calculated as described above
to the nearest millionth, and the Individual Fund [f]((F))ee [r]((R))ate shall
constitute the [a]((A))nnual [m]((M))anagement [f]((F))ee [r]((R))ate.
One-twelfth of the [a]((A))nnual [m]((M))anagement [f]((F))ee ((Rate)) shall be
applied to the average of the net assets of the Portfolio (computed in the
manner set forth in the ((Fund's)) Declaration of Trust ((or other
organizational document))) determined as of the close of business on each
business day throughout the month.
(((c))) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
3
<PAGE>
4. It is understood that the Portfolio will pay all its expenses, [other
than those expressly stated to be payable by the Adviser hereunder,] which
expenses payable by the Portfolio shall [,] include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Fund's Trustees other than those who are "interested
persons" of the Fund or the Adviser; (iv) legal and audit expenses; (v)
custodian, registrar and transfer agent fees and expenses; (vi) fees and
expenses [relating] ((related)) to the registration and qualification of the
Fund and the Portfolio's shares for distribution under state and federal
securities laws; (vii) expenses of printing and mailing reports and notices and
proxy material to shareholders of the Portfolio; (viii) all other expenses
incidental to holding meetings of the Portfolio's shareholders, including proxy
solicitations therefor; (ix) a pro rata share, based on relative net assets of
the Portfolio and other registered investment companies having Advisory and
Service or Management Contracts with the Adviser, of 50% of insurance premiums
for fidelity and other coverage; (x) its proportionate share of association
membership dues; (xi) expenses of typesetting for printing Prospectuses and
Statements of Additional Information and supplements thereto; (xii) expenses of
printing and mailing Prospectuses and Statements of Additional Information and
supplements thereto sent to existing shareholders; and (xiii) such non-recurring
or extraordinary expenses as may arise, including those relating to actions,
suits or proceedings to which the Portfolio is a party and the legal obligation
which the Portfolio may have to indemnify the Fund's Trustees and officers with
respect thereto.
5. The services of the Adviser to the Portfolio are not to be deemed
exclusive, the Adviser being free to render services to others and engage in
other activities, provided, however, that such other services and activities do
not, during the term of this Contract, interfere, in a material manner, with the
Adviser's ability to meet all of its obligations with respect to rendering
services to the Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Adviser, the Adviser shall not be subject to liability to the
Portfolio or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security ((or
other investment instrument)).
6. (a) Subject to prior termination as provided in sub-paragraph (d) of
this paragraph 6, this Contract shall continue in force until June 30, [1994]
((1999)) and indefinitely thereafter, but only so long as the continuance after
such date shall be specifically approved at least annually by vote of the
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio.
(b) This Contract may be modified by mutual consent [, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio] ((subject to the provisions of Section 15 of
the 1940 Act, as modified by or interpreted by any applicable order or orders of
the Securities and Exchange Commission (the "Commission") or any rules or
regulations adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph 6, the terms of any continuance or modification of this Contract must
have been approved by the vote of a majority of those Trustees of the Fund who
are not parties to the Contract or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any penalty, by
action of its Trustees or Board of Directors, as the case may be, or with
respect to the Portfolio by vote of a majority of the outstanding voting
securities of the Portfolio. This Contract shall terminate automatically in the
event of its assignment.
7. The Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Fund's Declaration of Trust ((or other
organizational document)) and agrees that the obligations assumed by the Fund
pursuant to this Contract shall be limited in all cases to the Portfolio and its
assets, and the Adviser shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Portfolio or any other Portfolios of
the Fund. In addition, the Adviser shall not seek satisfaction of any such
obligations from the Trustees or any individual Trustee. The Adviser understands
that the rights and obligations of any Portfolio under the Declaration of Trust
4
<PAGE>
((or other organizational document)) are separate and distinct from those of any
and all other Portfolios.
8. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts((, without giving effect to the
choice of laws provisions thereof)).
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as hereafter
amended, and subject to such orders as may be granted by the [Securities and
Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
[SIGNATURE LINES OMITTED]
<PAGE>
EXHIBIT 4
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
MANAGEMENT CONTRACT
BETWEEN
FIDELITY FIXED-INCOME TRUST:
[SPARTAN] ((FIDELITY)) HIGH INCOME FUND
AND
FIDELITY MANAGEMENT & RESEARCH COMPANY
[AGREEMENT] ((AMENDMENT)) made this [1st] (( )) day of [November 1993] ((
1999)), by and between Fidelity Fixed-Income Trust, a Massachusetts business
trust which may issue one or more series of shares of beneficial interest
(hereinafter called the "Fund"), on behalf of [Spartan] ((Fidelity)) High Income
Fund (hereinafter called the "Portfolio"), and Fidelity Management & Research
Company, a Massachusetts corporation (hereinafter called the "Adviser") ((as set
forth in its entirety below)).
Required authorization and approval by shareholders and Trustees having
been obtained, the Trust, on behalf of the Portfolio, and the [Advisor]
((Adviser)) hereby consent, pursuant to Paragraph 6 of the existing Management
Contract dated [July 19, 1989] ((November 1, 1993)), to a modification of said
Contract in the manner set forth below. The [Modified] ((Amended)) Management
Contract shall((,)) when executed by duly authorized officers of the Fund and
the [Advisor] ((Adviser)), take effect on [the later of November 1, 1993 or the
first day of the month following approval] ((_______, 1999)).
1. (a) Investment Advisory Services. The Adviser undertakes to act as
investment adviser of the Portfolio and shall, subject to the supervision of the
Fund's Board of Trustees, direct the investments of the Portfolio in accordance
with the investment objective, policies and limitations as provided in the
Portfolio's Prospectus or other governing instruments, as amended from time to
time, the Investment Company Act of 1940 and rules thereunder, as amended from
time to time (the "1940 Act"), and such other limitations as the Portfolio may
impose by notice in writing to the Adviser. The Adviser shall also furnish for
the use of the Portfolio office space and all necessary office facilities,
equipment and personnel for servicing the investments of the Portfolio; and
shall pay the salaries and fees of all officers of the Fund, of all Trustees of
the Fund who are "interested persons" of the Fund or of the Adviser and of all
personnel of the Fund or the Adviser performing services relating to research,
statistical and investment activities. The Adviser is authorized, in its
discretion and without prior consultation with the Portfolio, to buy, sell, lend
and otherwise trade in any stocks, bonds and other securities and investment
instruments on behalf of the Portfolio. The investment policies and all other
actions of the Portfolio are and shall at all times be subject to the control
and direction of the Fund's Board of Trustees.
(b) Management Services. The Adviser shall perform (or arrange for the
performance by its affiliates of) the management and administrative services
necessary for the operation of the Fund. The Adviser shall, subject to the
supervision of the Board of Trustees, perform various services for the
Portfolio, including but not limited to: (i) providing the Portfolio with office
space, equipment and facilities (which may be its own) for maintaining its
organization; (ii) on behalf of the Portfolio, supervising relations with, and
monitoring the performance of, custodians, depositories, transfer and pricing
agents, accountants, attorneys, underwriters, brokers and dealers, insurers and
other persons in any capacity deemed to be necessary or desirable; (iii)
preparing all general shareholder communications, including shareholder reports;
(iv) conducting shareholder relations; (v) maintaining the Fund's existence and
its records; (vi) during such times as shares are publicly offered, maintaining
the registration and qualification of the Portfolio's shares under federal and
state law; and (vii) investigating the development of and developing and
implementing, if appropriate, management and shareholder services designed to
enhance the value or convenience of the Portfolio as an investment vehicle.
<PAGE>
The Adviser shall also furnish such reports, evaluations, information or
analyses to the Fund as the Fund's Board of Trustees may request from time to
time or as the Adviser may deem to be desirable. The Adviser shall make
recommendations to the Fund's Board of Trustees with respect to Fund policies,
and shall carry out such policies as are adopted by the Trustees. The Adviser
shall, subject to review by the Board of Trustees, furnish such other services
as the Adviser shall from time to time determine to be necessary or useful to
perform its obligations under this Contract.
(c) [The Adviser undertakes to pay all expenses involved in the
operation of the Portfolio, except the following, which shall be paid by the
Portfolio: (i) taxes; (ii) the fees and expenses of all Trustees of the Fund who
are not "interested persons" of the Fund or of the Adviser; (iii) brokerage fees
and commissions; (iv) interest expenses with respect to borrowings by the
Portfolio; and (v) such non-recurring and extraordinary expenses as may arise,
including actions, suits or proceedings to which the Portfolio is or is threaten
to be a part and the legal obligation that the Portfolio may have to indemnify
the Fund's Trustees and officers with respect thereto. It is understood that
service charges billed directly to shareholders of the Portfolio, including
charges for exchanges, redemptions, or other services, shall not be payable by
the Adviser, but may be received and retained by the Adviser or its affiliates.]
[(d)]The Adviser [, at its own expense,] shall place all orders for the purchase
and sale of portfolio securities for the Portfolio's account with brokers or
dealers selected by the Adviser, which may include brokers or dealers affiliated
with the Adviser. The Adviser shall use its best efforts to seek to execute
portfolio transactions at prices which are advantageous to the Portfolio and at
commission rates which are reasonable in relation to the benefits received. In
selecting brokers or dealers qualified to execute a particular transaction,
brokers or dealers may be selected who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) to the Portfolio and/or the other accounts over which the Adviser
or its affiliates exercise investment discretion. The Adviser is authorized to
pay a broker or dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Portfolio which is in
excess of the amount of commission another broker or dealer would have charged
for effecting that transaction if the Adviser determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer. This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities which the Adviser and its affiliates have with respect to
accounts over which they exercise investment discretion. The Trustees of the
Fund shall periodically review the commissions paid by the Portfolio to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits to the Portfolio.
The Adviser shall, in acting hereunder, be an independent contractor. The
Adviser shall not be an agent of the Portfolio.
2. It is understood that the Trustees, officers and shareholders of the
Fund are or may be or become interested in the Adviser as directors, officers or
otherwise and that directors, officers and stockholders of the Adviser are or
may be or become similarly interested in the Fund, and that the Adviser may be
or become interested in the Fund as a shareholder or otherwise.
3. [For the services and facilities to be furnished hereunder, the Adviser
shall receive a monthly management fee, payable monthly as soon as practicable
after the last day of each month, at the annual rate of .80% of the average net
assets of the Portfolio (computed in the manner set forth in the Fund's
Declaration of Trust) determined as of the close of business on each day
throughout the month; provided that the fee, so computed, shall be reduced by
the compensation, including reimbursement of expenses, paid by the Portfolio to
those Trustees who are not "interested persons" of the Fund or the Adviser.]
((The Adviser will be compensated on the following basis for the services and
facilities to be furnished hereunder. The Advisor shall receive a monthly
management fee, payable monthly as soon as practicable after the last day of
each month, composed of a Group Fee and an Individual Fund Fee.))
(((a) Group Fee Rate. The Group Fee Rate shall be based upon the monthly
average of the net assets of the registered investment companies having Advisory
and Service or Management Contracts with the Adviser (computed in the manner set
forth in the Fund's Declaration of Trust or other organizational document)
determined as of the close of business on each business day throughout the
2
<PAGE>
month. The Group Fee Rate shall be determined on a cumulative basis pursuant to
the following schedule:))
3
<PAGE>
((Average Net Assets)) ((Annualized Fee Rate (for each level)))
---------------------- ----------------------------------------
((0 -$ 3 billion)) ((.3700%))
((3 -6)) ((.3400))
((6 -9)) ((.3100))
((9 -12)) ((.2800))
((12 -15)) ((.2500))
((15 -18)) ((.2200))
((18 -21)) ((.2000))
((21 -24)) ((.1900))
((24 -30)) ((.1800))
((30 -36)) ((.1750))
((36 -42)) ((.1700))
((42 -48)) ((.1650))
((48 -66)) ((.1600))
((66 -84)) ((.1550))
((84 -120)) ((.1500))
4
<PAGE>
((120 -156)) ((.1450))
((156 -192)) ((.1400))
((192 -228)) ((.1350))
((228 -264)) ((.1300))
((264 -300)) ((.1275))
((300 -336)) ((.1250))
((336 -372)) ((.1225))
((372 -408)) ((.1200))
((408 -444)) ((.1175))
((444 -480)) ((.1150))
((480 -516)) ((.1125))
((Over 516)) ((.1100))
(((b) Individual Fund Fee Rate. The Individual Fund Fee Rate shall be
0.45%.))
((The sum of the Group Fee Rate, calculated as described above to the
nearest millionth, and the Individual Fund Fee Rate shall constitute the Annual
Management Fee Rate. One-twelfth of the Annual Management Fee Rate shall be
applied to the average of the net assets of the Portfolio (computed in the
manner set forth in the Fund's Declaration of Trust or other organizational
document) determined as of the close of business on each business day throughout
the month. ))
(((c))) In case of termination of this Contract during any month, the fee
for that month shall be reduced proportionately on the basis of the number of
business days during which it is in effect, and the fee computed upon the
average net assets for the business days it is so in effect for that month.
((4.It is understood that the Portfolio will pay all its expenses, which
expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
5
<PAGE>
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Fund's Trustees other than those who are "interested
persons" of the Fund or the Adviser; (iv) legal and audit expenses; (v)
custodian, registrar and transfer agent fees and expenses; (vi) fees and
expenses related to the registration and qualification of the Fund and the
Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefor; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Adviser, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Fund's Trustees and officers with
respect thereto.))
[4.]((5.)) The services of the Adviser to the Portfolio are not to be
deemed exclusive, the Adviser being free to render services to others and engage
in other activities, provided, however, that such other services and activities
do not, during the term of this Contract, interfere, in a material manner, with
the Adviser's ability to meet all of its obligations with respect to rendering
services to the Portfolio hereunder. In the absence of willful misfeasance, bad
faith, gross negligence or reckless disregard of obligations or duties hereunder
on the part of the Adviser, the Adviser shall not be subject to liability to the
Portfolio or to any shareholder of the Portfolio for any act or omission in the
course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security ((or
other investment instrument)).
[5.]((6.)) (a) Subject to prior termination as provided in sub-paragraph
(d) of this paragraph [5]((6)), this Contract shall continue in force until
[July 31, 1994,] ((June 30, 1999)) and indefinitely thereafter, but only so long
as the continuance after such date shall be specifically approved at least
annually by vote of the Trustees of the Fund or by vote of a majority of the
outstanding voting securities of the Portfolio.
(b) This Contract may be modified by mutual consent [, such consent on the
part of the Fund to be authorized by vote of a majority of the outstanding
voting securities of the Portfolio] ((subject to the provisions of Section 15 of
the 1940 Act, as modified by or interpreted by any applicable order or orders of
the Securities and Exchange Commission (the "Commission") or any rules or
regulations adopted by, or interpretative releases of, the Commission)).
(c) In addition to the requirements of sub-paragraphs (a) and (b) of this
paragraph [5]((6)), the terms of any continuance or modification of this
Contract must have been approved by the vote of a majority of those Trustees of
the Fund who are not parties to the Contract or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either party hereto may, at any time on sixty (60) days' prior written
notice to the other, terminate this Contract, without payment of any penalty, by
action of its Trustees or Board of Directors, as the case may be, or with
respect to the Portfolio by vote of a majority of the outstanding voting
securities of the Portfolio. This Contract shall terminate automatically in the
event of its assignment.
[6.]((7.)) The Adviser is hereby expressly put on notice of the limitation
of shareholder liability as set forth in the Fund's Declaration of Trust ((or
other organizational document)) and agrees that the obligations assumed by the
Fund pursuant to this Contract shall be limited in all cases to the Portfolio
and its assets, and the Adviser shall not seek satisfaction of any such
obligation from the shareholders or any shareholder of the Portfolio or any
other Portfolios of the Fund. In addition, the Adviser shall not seek
satisfaction of any such obligations from the Trustees or any individual
Trustee. The Adviser understands that the rights and obligations of any
Portfolio under the Declaration of Trust ((or other organizational document))
are separate and distinct from those of any and all other Portfolios.
((8.This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Massachusetts, without giving effect to the
choice of laws provisions thereof.))
6
<PAGE>
The terms "vote of a majority of the outstanding voting securities,"
"assignment," and "interested persons," when used herein, shall have the
respective meanings specified in the 1940 Act, as now in effect or as hereafter
amended, and subject to such orders as may be granted by the [Securities and
Exchange] Commission.
IN WITNESS WHEREOF the parties have caused this instrument to be signed in
their behalf by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
[SIGNATURE LINES OMITTED]
<PAGE>
EXHIBIT 5
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (U.K.) INC.
((AND))
((FIDELITY FIXED-INCOME TRUST ON BEHALF OF {NAME OF EACH PORTFOLIO OMITTED}))
[AGREEMENT] ((AMENDMENT)) made this [1st] ((__)) day of [November,
1989/1993] ((____, 1999)), by and between Fidelity Management & Research [(U.K.)
Inc.]((Company)), a Massachusetts corporation with principal offices at 82
Devonshire Street, Boston, Massachusetts [(hereinafter called the
"Sub-Adviser")](((hereinafter called the "Advisor"))) [and]((;)) Fidelity
Management & Research [Company](((U.K.) Inc.))[, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Adviser")](((hereinafter called the "Sub-Advisor"); and
Fidelity Fixed-Income Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called the "Trust")
on behalf of {NAME OF EACH PORTFOLIO OMITTED} (hereinafter called the
"Portfolio"))).
((Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, the Advisor and the
Sub-Advisor hereby consent, pursuant to Paragraph 6 of the existing Sub-Advisory
Agreement dated November 1, 1989/1993, to a modification of said Agreement in
the manner set forth below. The Amended Sub-Advisory Agreement shall, when
executed by duly authorized officers of the Fund, the Advisor and the
Sub-Advisor, take effect on ________, 1999.))
WHEREAS the [Adviser has]((Trust and the Advisor have)) entered into a
Management Contract [with Fidelity Fixed-Income Trust, a Massachusetts business
trust which may issue one or more series of shares of beneficial interest
(hereinafter called the "Fund"),]on behalf of [{name of each portfolio omitted}
(hereinafter called the "Portfolio"),]((the Portfolio,)) pursuant to which the
[Adviser]((Advisor)) is to act as investment [adviser to]((manager of)) the
Portfolio[,]((;)) and
WHEREAS the [Sub-Adviser has personnel in Western Europe and was
formed]((Sub-Advisor and its subsidiaries and other affiliated persons have
personnel in various locations throughout the world and have been formed in
part)) for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries((,)) and
((securities of)) issuers located [outside of North America, principally in
Western Europe.]((in such countries, and providing investment advisory services
in connection therewith;))
NOW((,)) THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the [Adviser and the Sub-Adviser]((Trust, the
Advisor and the Sub-Advisor)) agree as follows:
1. ((Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a portion
of the investments of the Portfolio. The services and the portion of the
investments of the Portfolio to be advised or managed by the Sub-Advisor shall
be as agreed upon from time to time by the Advisor and the Sub-Advisor. The
Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research, statistical and
investment activities.))
(((a) INVESTMENT ADVICE:)) [The Sub-Adviser]((If and to the extent
requested by the Advisor, the Sub-Advisor)) shall [act as an]((provide))
investment [consultant]((advice)) to ((the Portfolio and)) the
[Adviser]((Advisor with respect to all or a portion of the investments of
the Portfolio)), and ((in connection with such advice)) shall furnish ((the
Portfolio and)) the [Adviser]((Advisor such)) factual information, research
reports and investment recommendations [relating to non-U.S. issuers of
securities located in, and the economies of, various countries outside the
U.S., all] as the [Adviser]((Advisor)) may reasonably require. Such
information may include written and oral reports and analyses.
<PAGE>
(((b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money, or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.))
(((c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.))
((2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or analyses to
the Trust and the Advisor as the Trust's Board of Trustees or the Advisor may
reasonably request from time to time, or as the Sub-Advisor may deem to be
desirable.))
((3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Sub-Advisor, which may include brokers or
dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are reasonable in
relation to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to the
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
the Sub-Advisor determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in terms of
either that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises investment
discretion. The Trustees of the Trust shall periodically review the commissions
paid by the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the Portfolio.))
((4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.))
[(2)] (((a) INVESTMENT ADVISORY FEE:)) [The Sub-Adviser will be compensated
by the Adviser on the following basis for the services to be furnished
hereunder:]((For services provided under subparagraph (a) of paragraph 1 of
this Agreement,)) the [Adviser]((Advisor)) agrees to pay the
[Sub-Adviser]((Sub-Advisor)) a monthly [fee] ((Sub-Advisory Fee. The
Sub-Advisory Fee shall be)) equal to 110% of the
[Sub-Adviser]((Sub-Advisor))'s costs incurred in connection with [the
A/agreement, said costs to be determined in relation to the assets of the
Portfolio that benefits from the services of the S/sub-Adviser.]((rendering
the services referred to in subparagraph (a) of paragraph 1 of this
2
<PAGE>
Agreement. The Sub-Advisory Fee shall not be reduced to reflect expense
reimbursements or fee waivers by the Advisor, if any, in effect from time
to time.))
(((b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.))
(((c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.))
((5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the Portfolio,
which expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Trust's Trustees other than those who are "interested
persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi)
fees and expenses related to the registration and qualification of the Trust and
the Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefore; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Trust's Trustees and officers with
respect thereto.))
[3.]((6. Interested Persons:)) It is understood that Trustees, officers,
and shareholders of the [Fund]((Trust)) are or may be or become interested in
the [Adviser]((Advisor)) [and]((or)) the [Sub-Adviser]((Sub-Advisor)) as
directors, officers or otherwise and that directors, officers and stockholders
of the [Adviser]((Advisor)) [and]((or)) the [Sub-Adviser]((Sub-Advisor)) are or
may be or become similarly interested in the [Fund]((Trust,)) and that the
[Adviser] ((Advisor)) or the [Sub-Adviser]((Sub-Advisor)) may be or become
interested in the [Fund]((Trust)) as a shareholder or otherwise.
3
<PAGE>
[5.]((7. Services to Other Companies or Accounts:)) The [S]((s))ervices of
the [Sub-Adviser]((Sub-Advisor)) to the [Adviser]((Advisor)) are not to be
deemed to be exclusive, the [Sub-Adviser]((Sub-Advisor)) being free to render
services to others and engage in other activities, provided, however, that such
other services and activities do not, during the term of this Agreement,
interfere, in a material manner, with the [Sub-Adviser]((Sub-Advisor))'s ability
to meet all of its obligations [with respect to rendering investment advice]
hereunder. [4.]The [Sub-Adviser]((Sub-Advisor)) shall for all purposes be an
independent contractor and not an agent or employee of the [Adviser]((Advisor))
or the [Fund]((Trust)). [The Sub-Adviser shall have no authority to act for,
represent, bind or obligate the Adviser or the Fund, and shall in no event have
discretion to invest or reinvest assets held by the Portfolio.]
((8. Standard of Care:)) In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of the [Sub-Adviser]((Sub-Advisor,)) the [Sub-Adviser]((Sub-Advisor)) shall
not be subject to liability to the [Adviser]((Advisor)), the [Fund]((Trust)) or
to any shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
[6.]((9. Duration and Termination of Agreement; Amendments:))
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph [6]((9)), this Agreement shall continue in force until [May
31, 1990/July 31, 1994]((June 30, 1999)) and indefinitely thereafter,
but only so long as the continuance after such period shall be
specifically approved at least annually by vote of the
[Fund's]((Trust's)) Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the
[Adviser]((Advisor)), the [Sub-Adviser]((Sub-Advisor)) and the
Portfolio[, such consent on the part of the Portfolio to be
authorized by vote of a majority of the outstanding voting securities
of the Portfolio.]((subject to the provisions of Section 15 of the
1940 Act, as modified by or interpreted by any applicable order or
orders of the Securities and Exchange Commission (the "Commission")
or any rules or regulations adopted by, or interpretative releases
of, the Commission.))
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph [6]((9)), the terms of any continuance or modification of
[the]((this)) Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund]((Trust)) who are not parties
to [such]((this)) Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either the [Adviser]((Advisor)), the [Sub-Adviser]((Sub-Advisor)) or
the Portfolio may, at any time on sixty (60) days' prior written
notice to the other parties, terminate this Agreement, without
payment of any penalty, by action of its Board of Trustees or
Directors, or ((with respect to the Portfolio)) by vote of a majority
of its outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
[7.]((10. Limitation of Liability:)) The [Sub-Adviser]((Sub-Advisor)) is
hereby expressly put on notice of the limitation of shareholder liability as set
forth in the Declaration of Trust [of the Fund and]((or other organizational
document of the Trust and)) agrees that any obligations of the [Fund]((Trust))
or the Portfolio arising in connection with this Agreement shall be limited in
all cases to the Portfolio and its assets, and the [Sub-Adviser]((Sub-Advisor))
shall not seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the [Sub-Adviser]((Sub-Advisor)) seek
satisfaction of any such obligation from the Trustees or any individual Trustee.
((11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.))
4
<PAGE>
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons," when
used herein, shall have the respective meanings specified in the [Investment
Company Act of ] 1940 ((Act)) as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly authorized,
and their respective seals to be hereunto affixed, all as of the date written
above.
[SIGNATURE LINES OMITTED]
<PAGE>
EXHIBIT 6
((UNDERLINED)) LANGUAGE WILL BE ADDED
[BRACKETED] LANGUAGE WILL BE DELETED
FORM OF
SUB-ADVISORY AGREEMENT
BETWEEN
FIDELITY MANAGEMENT & RESEARCH COMPANY
AND
FIDELITY MANAGEMENT & RESEARCH (FAR EAST) INC.
((AND))
((FIDELITY FIXED-INCOME TRUST ON BEHALF OF {NAME OF EACH PORTFOLIO OMITTED}))
[AGREEMENT] ((AMENDMENT)) made this [1st] ((___)) day of [November,
1989/1993] ((_________, 1999)), by and between Fidelity Management & Research
[(Far East) Inc.]((Company)), a Massachusetts corporation with principal offices
at 82 Devonshire Street, Boston, Massachusetts [(hereinafter called the
"Sub-Adviser")](((hereinafter called the "Advisor"))) [and]((;)) Fidelity
Management & Research [Company](((Far East) Inc.))[, a Massachusetts corporation
with principal offices at 82 Devonshire Street, Boston, Massachusetts
(hereinafter called the "Adviser")](((hereinafter called the "Sub-Advisor"); and
Fidelity Fixed-Income Trust, a Massachusetts business trust which may issue one
or more series of shares of beneficial interest (hereinafter called the "Trust")
on behalf of {NAME OF EACH PORTFOLIO OMITTED} (hereinafter called the
"Portfolio"))).
((Required authorization and approval by shareholders and Trustees having
been obtained, the Fund, on behalf of the Portfolio, the Advisor and the
Sub-Advisor hereby consent, pursuant to Paragraph 6 of the existing Sub-Advisory
Agreement dated November 1, 1989/1993, to a modification of said Agreement in
the manner set forth below. The Amended Sub-Advisory Agreement shall, when
executed by duly authorized officers of the Fund, the Advisor and the
Sub-Advisor, take effect on _______, 1999.))
WHEREAS the [Adviser has]((Trust and the Advisor have)) entered into a
Management Contract [with Fidelity Fixed-Income Trust, a Massachusetts business
trust which may issue one or more series of shares of beneficial interest
(hereinafter called the "Fund"),]on behalf of [{name of each portfolio omitted}
(hereinafter called the "Portfolio"),]((the Portfolio,)) pursuant to which the
[Adviser]((Advisor)) is to act as investment [adviser to]((manager of)) the
Portfolio[,]((;)) and
WHEREAS the [Sub-Adviser has personnel in Asia and the Pacific Basin and
was formed] ((Sub-Advisor and its subsidiaries and other affiliated persons have
personnel in various locations throughout the world and have been formed in
part)) for the purpose of researching and compiling information and
recommendations with respect to the economies of various countries, and
((securities of)) issuers located [outside of North America, principally in Asia
and the Pacific Basin.] ((in such countries, and providing investment advisory
services in connection therewith;))
NOW((,)) THEREFORE, in consideration of the premises and the mutual
promises hereinafter set forth, the [Adviser and Sub-Adviser] ((Trust, the
Advisor and the Sub-Advisor)) agree as follows:
1. ((Duties: The Advisor may, in its discretion, appoint the Sub-Advisor to
perform one or more of the following services with respect to all or a portion
of the investments of the Portfolio. The services and the portion of the
investments of the Portfolio to be advised or managed by the Sub-Advisor shall
be as agreed upon from time to time by the Advisor and the Sub-Advisor. The
Sub-Advisor shall pay the salaries and fees of all personnel of the Sub-Advisor
performing services for the Portfolio relating to research, statistical and
investment activities.))
(((a) INVESTMENT ADVICE:)) [The Sub-Adviser]((If and to the extent
requested by the Advisor, the Sub-Advisor)) shall [act as an]((provide))
investment [consultant]((advice)) to ((the Portfolio and)) the
[Adviser]((Advisor with respect to all or a portion of the investments of
the Portfolio)), and ((in connection with such advice)) shall furnish ((the
Portfolio and)) the [Adviser]((Advisor such)) factual information, research
reports and investment recommendations [relating to non-U.S. issuers of
<PAGE>
securities located in, and the economies of, various countries outside the
U.S., all] as the [Adviser]((Advisor)) may reasonably require. Such
information may include written and oral reports and analyses.
(((b) INVESTMENT MANAGEMENT: If and to the extent requested by the Advisor,
the Sub-Advisor shall, subject to the supervision of the Advisor, manage
all or a portion of the investments of the Portfolio in accordance with the
investment objective, policies and limitations provided in the Portfolio's
Prospectus or other governing instruments, as amended from time to time,
the Investment Company Act of 1940 (the "1940 Act") and rules thereunder,
as amended from time to time, and such other limitations as the Trust or
Advisor may impose with respect to the Portfolio by notice to the
Sub-Advisor. With respect to the portion of the investments of the
Portfolio under its management, the Sub-Advisor is authorized to make
investment decisions on behalf of the Portfolio with regard to any stock,
bond, other security or investment instrument, and to place orders for the
purchase and sale of such securities through such broker-dealers as the
Sub-Advisor may select. The Sub-Advisor may also be authorized, but only to
the extent such duties are delegated in writing by the Advisor, to provide
additional investment management services to the Portfolio, including but
not limited to services such as managing foreign currency investments,
purchasing and selling or writing futures and options contracts, borrowing
money, or lending securities on behalf of the Portfolio. All investment
management and any other activities of the Sub-Advisor shall at all times
be subject to the control and direction of the Advisor and the Trust's
Board of Trustees.))
(((c) SUBSIDIARIES AND AFFILIATES: The Sub-Advisor may perform any or all
of the services contemplated by this Agreement directly or through such of
its subsidiaries or other affiliated persons as the Sub-Advisor shall
determine; provided, however, that performance of such services through
such subsidiaries or other affiliated persons shall have been approved by
the Trust to the extent required pursuant to the 1940 Act and rules
thereunder.))
((2. Information to be Provided to the Trust and the Advisor: The
Sub-Advisor shall furnish such reports, evaluations, information or analyses to
the Trust and the Advisor as the Trust's Board of Trustees or the Advisor may
reasonably request from time to time, or as the Sub-Advisor may deem to be
desirable.))
((3. Brokerage: In connection with the services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Sub-Advisor shall place all orders for
the purchase and sale of portfolio securities for the Portfolio's account with
brokers or dealers selected by the Sub-Advisor, which may include brokers or
dealers affiliated with the Advisor or Sub-Advisor. The Sub-Advisor shall use
its best efforts to seek to execute portfolio transactions at prices which are
advantageous to the Portfolio and at commission rates which are reasonable in
relation to the benefits received. In selecting brokers or dealers qualified to
execute a particular transaction, brokers or dealers may be selected who also
provide brokerage and research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of l934) to the Portfolio and/or to the
other accounts over which the Sub-Advisor or Advisor exercise investment
discretion. The Sub-Advisor is authorized to pay a broker or dealer who provides
such brokerage and research services a commission for executing a portfolio
transaction for the Portfolio which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
the Sub-Advisor determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer. This determination may be viewed in terms of
either that particular transaction or the overall responsibilities which the
Sub-Advisor has with respect to accounts over which it exercises investment
discretion. The Trustees of the Trust shall periodically review the commissions
paid by the Portfolio to determine if the commissions paid over representative
periods of time were reasonable in relation to the benefits to the Portfolio.))
((4. Compensation: The Advisor shall compensate the Sub-Advisor on the
following basis for the services to be furnished hereunder.))
[(2)] (((a) INVESTMENT ADVISORY FEE:)) [The Sub-Adviser will be compensated
by the Adviser on the following basis for the services to be furnished
hereunder:]((For services provided under subparagraph (a) of paragraph 1 of
this Agreement,)) the [Adviser]((Advisor)) agrees to pay the
[Sub-Adviser]((Sub-Advisor)) a monthly [fee] ((Sub-Advisory Fee. The
Sub-Advisory Fee shall be)) equal to 105% of the
[Sub-Adviser]((Sub-Advisor))'s costs incurred in connection with [the
A/agreement, said costs to be determined in relation to the assets of the
2
<PAGE>
Portfolio that benefit from the services of the
S/sub-A/adviser.]((rendering the services referred to in subparagraph (a)
of paragraph 1 of this Agreement. The Sub-Advisory Fee shall not be reduced
to reflect expense reimbursements or fee waivers by the Advisor, if any, in
effect from time to time.))
(((b) INVESTMENT MANAGEMENT FEE: For services provided under subparagraph
(b) of paragraph 1 of this Agreement, the Advisor agrees to pay the
Sub-Advisor a monthly Investment Management Fee. The Investment Management
Fee shall be equal to: (i) 50% of the monthly management fee rate
(including performance adjustments, if any) that the Portfolio is obligated
to pay the Advisor under its Management Contract with the Advisor,
multiplied by: (ii) the fraction equal to the net assets of the Portfolio
as to which the Sub-Advisor shall have provided investment management
services divided by the net assets of the Portfolio for that month. If in
any fiscal year the aggregate expenses of the Portfolio exceed any
applicable expense limitation imposed by any state or federal securities
laws or regulations, and the Advisor waives all or a portion of its
management fee or reimburses the Portfolio for expenses to the extent
required to satisfy such limitation, the Investment Management Fee paid to
the Sub-Advisor will be reduced by 50% of the amount of such waivers or
reimbursements multiplied by the fraction determined in (ii). If the
Sub-Advisor reduces its fees to reflect such waivers or reimbursements and
the Advisor subsequently recovers all or any portion of such waivers and
reimbursements, then the Sub-Advisor shall be entitled to receive from the
Advisor a proportionate share of the amount recovered. To the extent that
waivers and reimbursements by the Advisor required by such limitations are
in excess of the Advisor's management fee, the Investment Management Fee
paid to the Sub-Advisor will be reduced to zero for that month, but in no
event shall the Sub-Advisor be required to reimburse the Advisor for all or
a portion of such excess reimbursements.))
(((c) PROVISION OF MULTIPLE SERVICES: If the Sub-Advisor shall have
provided both investment advisory services under subparagraph (a) and
investment management services under subparagraph (b) of paragraph 1 for
the same portion of the investments of the Portfolio for the same period,
the fees paid to the Sub-Advisor with respect to such investments shall be
calculated exclusively under subparagraph (b) of this paragraph 4.))
((5. Expenses: It is understood that the Portfolio will pay all of its
expenses other than those expressly stated to be payable by the Sub-Advisor
hereunder or by the Advisor under the Management Contract with the Portfolio,
which expenses payable by the Portfolio shall include, without limitation, (i)
interest and taxes; (ii) brokerage commissions and other costs in connection
with the purchase or sale of securities and other investment instruments; (iii)
fees and expenses of the Trust's Trustees other than those who are "interested
persons" of the Trust, the Sub-Advisor or the Advisor; (iv) legal and audit
expenses; (v) custodian, registrar and transfer agent fees and expenses; (vi)
fees and expenses related to the registration and qualification of the Trust and
the Portfolio's shares for distribution under state and federal securities laws;
(vii) expenses of printing and mailing reports and notices and proxy material to
shareholders of the Portfolio; (viii) all other expenses incidental to holding
meetings of the Portfolio's shareholders, including proxy solicitations
therefore; (ix) a pro rata share, based on relative net assets of the Portfolio
and other registered investment companies having Advisory and Service or
Management Contracts with the Advisor, of 50% of insurance premiums for fidelity
and other coverage; (x) its proportionate share of association membership dues;
(xi) expenses of typesetting for printing Prospectuses and Statements of
Additional Information and supplements thereto; (xii) expenses of printing and
mailing Prospectuses and Statements of Additional Information and supplements
thereto sent to existing shareholders; and (xiii) such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Portfolio is a party and the legal obligation which
the Portfolio may have to indemnify the Trust's Trustees and officers with
respect thereto.))
[3.]((6. Interested Persons:)) It is understood that Trustees, officers,
and shareholders of the [Fund]((Trust)) are or may be or become interested in
the [Adviser]((Advisor)) [and]((or)) the [Sub-Adviser]((Sub-Advisor)) as
directors, officers or otherwise and that directors, officers and stockholders
of the [Adviser]((Advisor)) [and]((or)) the [Sub-Adviser]((Sub-Advisor)) are or
may be or become similarly interested in the [Fund]((Trust,)) and that the
[Adviser] ((Advisor)) or the [Sub-Adviser]((Sub-Advisor)) may be or become
interested in the [Fund]((Trust)) as a shareholder or otherwise.
3
<PAGE>
[5.]((7. Services to Other Companies or Accounts:)) The [S]((s))ervices of
the [Sub-Adviser]((Sub-Advisor)) to the [Adviser]((Advisor)) are not to be
deemed to be exclusive, the [Sub-Adviser]((Sub-Advisor)) being free to render
services to others and engage in other activities, provided, however, that such
other services and activities do not, during the term of this Agreement,
interfere, in a material manner, with the [Sub-Adviser]((Sub-Advisor))'s ability
to meet all of its obligations [with respect to rendering investment advice]
hereunder. [4.]The [Sub-Adviser]((Sub-Advisor)) shall for all purposes be an
independent contractor and not an agent or employee of the [Adviser]((Advisor))
or the [Fund]((Trust)). [The Sub-Adviser shall have no authority to act for,
represent, bind or obligate the Adviser or the Fund, and shall in no event have
discretion to invest or reinvest assets held by the Portfolio.]
((8. Standard of Care:)) In the absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of the [Sub-Adviser]((Sub-Advisor,)) the [Sub-Adviser]((Sub-Advisor)) shall
not be subject to liability to the [Adviser]((Advisor)), the [Fund]((Trust)) or
to any shareholder of the Portfolio for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
[6.]((9. Duration and Termination of Agreement; Amendments:))
(a) Subject to prior termination as provided in subparagraph (d) of this
paragraph [6]((9)), this Agreement shall continue in force until [May
31, 1990/July 31, 1994]((June 30, 1999)) and indefinitely thereafter,
but only so long as the continuance after such period shall be
specifically approved at least annually by vote of the
[Fund's]((Trust's)) Board of Trustees or by vote of a majority of the
outstanding voting securities of the Portfolio.
(b) This Agreement may be modified by mutual consent of the
[Adviser]((Advisor)), the [Sub-Adviser]((Sub-Advisor)) and the
Portfolio[, such consent on the part of the Portfolio to be
authorized by vote of a majority of the outstanding voting securities
of the Portfolio.]((subject to the provisions of Section 15 of the
1940 Act, as modified by or interpreted by any applicable order or
orders of the Securities and Exchange Commission (the "Commission")
or any rules or regulations adopted by, or interpretative releases
of, the Commission.))
(c) In addition to the requirements of subparagraphs (a) and (b) of this
paragraph [6]((9)), the terms of any continuance or modification of
[the]((this)) Agreement must have been approved by the vote of a
majority of those Trustees of the [Fund]((Trust)) who are not parties
to [such]((this)) Agreement or interested persons of any such party,
cast in person at a meeting called for the purpose of voting on such
approval.
(d) Either the [Adviser]((Advisor)), the [Sub-Adviser]((Sub-Advisor)) or
the Portfolio may, at any time on sixty (60) days' prior written
notice to the other parties, terminate this Agreement, without
payment of any penalty, by action of its Board of Trustees or
Directors, or ((with respect to the Portfolio)) by vote of a majority
of its outstanding voting securities. This Agreement shall terminate
automatically in the event of its assignment.
[7.]((10. Limitation of Liability:)) The [Sub-Adviser]((Sub-Advisor)) is
hereby expressly put on notice of the limitation of shareholder liability as set
forth in the Declaration of Trust [of the Fund and]((or other organizational
document of the Trust and)) agrees that any obligations of the [Fund]((Trust))
or the Portfolio arising in connection with this Agreement shall be limited in
all cases to the Portfolio and its assets, and the [Sub-Adviser]((Sub-Advisor))
shall not seek satisfaction of any such obligation from the shareholders or any
shareholder of the Portfolio. Nor shall the [Sub-Adviser]((Sub-Advisor)) seek
satisfaction of any such obligation from the Trustees or any individual Trustee.
((11. Governing Law: This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, without giving
effect to the choice of laws provisions thereof.))
4
<PAGE>
The terms "registered investment company," "vote of a majority of the
outstanding voting securities," "assignment," and "interested persons," when
used herein, shall have the respective meanings specified in the [Investment
Company Act of ] 1940 ((Act)) as now in effect or as hereafter amended.
IN WITNESS WHEREOF the parties hereto have caused this instrument to be
signed in their behalf by their respective officers thereunto duly authorized,
and their respective seals to be hereunto affixed, all as of the date written
above.
[SIGNATURE LINES OMITTED]
<PAGE>
EXHIBIT 7
TABLE WILL BE UPDATED IN A SUBSEQUENT FILING
Funds Advised by FMR - Table of Average Net Assets and Expense Ratios (a)
Ratio of Net
Advisory Fees
to Average
Average Net Assets
Investment Fiscal Net Assets Paid
Objective and Fund Year End (a) (millions) (b) to FMR (c)
- ------------------ ------------ -------------- ----------
Taxable Bond
Spartan Ginnie Mae 8/31/97 461.8 0.51*
Short-Intermediate 9/30/97 122.2 0.44
Government
Spartan Investment Grade 9/30/97 404.0 0.48*
Bond (pound)
Spartan Short-Term Bond 9/30/97 306.0 0.50*
(pound)
Advisor Mortgage
Securities:
Class A 10/31/97 1.6 0.44*
Class B 10/31/97 1.2 0.44*
Class T 10/31/97 13.0 0.44*
Institutional Class 10/31/97 15.2 0.44*
Initial Class 10/31/97 497.7 0.44*
Advisor Government
Investment:
Class A 10/31/97 0.7
Class B 10/31/97 17.3 0.44*
Class T 10/31/97 171.0 0.44*
Class C ([]) 10/31/97 1.3 0.44*
Institutional Class 10/31/97 22.0 0.44*
Advisor High Yield: (pound)
Class A 10/31/97 19.7 0.59
Class B 10/31/97 460.7 0.59
Class T 10/31/97 1,972.7 0.59
Class C ([]) 10/31/97 82.8 0.59
Institutional Class 10/31/97 54.6 0.59
Advisor Short
Fixed-Income: (pound)
Class A 10/31/97 3.1 0.44%
Class T 10/31/97 380.2 0.44
Class C ([]) 10/31/97 0.8 0.44*
Institutional Class 10/31/97 5.9 0.44*
Advisor Intermediate
Bond: (pound)
Class A 11/30/97 2.1 0.44*
Class B 11/30/97 19.6 0.44*
Class T 11/30/97 262.1 0.44
Class C )( 11/30/97 0.0 0.44*
Institutional Class 11/30/97 192.5 0.44
Institutional
Short-Intermediate
Government 11/30/97 342.8 0.45
Real Estate High Income 11/30/97 46.1 0.74
Advisor Emerging Markets
Income: (#)
Class A 12/31/97 1/3 0.69*
Class B 12/31/97 22.3 0.69
Class T 12/31/97 92.2 0.69
Class C 12/31/97 0.0 0.69*
Institutional Class 12/31/97 3.6 0.69*
<PAGE>
Ratio of Net
Advisory Fees
to Average
Average Net Assets
Investment Fiscal Net Assets Paid
Objective and Fund Year End (a) (millions) (b) to FMR (c)
- ------------------ ------------ -------------- ----------
Advisor Strategic Income:(#)
Class A 12/31/97 1.7 0.59*
Class B 12/31/97 45.5 0.59
Class T 12/31/97 110.6 0.59
Class C 12/31/97 0.3 0.59*
Institutional Class 12/31/97 6.2 0.59*
Global Bond (Z) 12/31/97 92.5 0.69
New Markets Income (#) 12/31/97 386.4 0.69
Real Estate High Income II 12/31/97 73.9 0.74
Variable Insurance Products:
High Income (pound)
Initial Class 12/31/97 1,936.9 0.59
Service Class 12/31/97 0.0 0.59
Variable Insurance
Products II:
Investment Grade Bond 12/31/97 262.9 0.44
U.S. Bond Index 2/28/98 632.8 0.32*
Capital & Income (pound) 4/30/98 2,144.9 0.59
Intermediate Bond (pound) 4/30/98 3,139.1 0.44
Investment Grade Bond 4/30/98 1,617.5 0.44%
(pound)
Short-Term Bond (pound) 4/30/98 883.0 .044
Spartan Government Income 4/30/98 275.9 0.60*
Spartan High Income (pound) 4/30/98 2,412.2 0.80
Spartan Short-Intermediate
Government 4/30/98 72.8 0.65
The North Carolina Capital
Management Trust:
Term Portfolio 6/30/98 71.0 0.36
Ginnie Mae (pound) 7/31/98 863.5 0.44
Government Income 7/31/98 1,191.0 0.44
Intermediate Government
Income (pound) 7/31/98 735.8 0.65
Target Timeline Funds:
(pound)
1999 7/31/98 13.1 0.40
2001 7/31/98 11.7 0.40
2003 7/31/98 16.5 0.40
(a) All fund data are as of the fiscal year-end noted in the chart or as of July
31, 1998, if fiscal year-end figures are not yet available.
(b) Average net assets are computed on the basis of average net assets of each
fund at the close of business on each business day throughout its fiscal
period.
(c) Reflects reductions for any expense reimbursement paid by or due from FMR
pursuant to voluntary or state expense limitations. Funds so affected are
indicated by an (*).
** Less than a complete fiscal year.
)( Average net assets for the period shown were less than $100,000.
(#) Fidelity Management & Research Company has entered into sub-advisory
agreements with the following affiliates: Fidelity Management & Research
(U.K.) Inc. (FMR U.K.), Fidelity Management & Research (Far East) Inc. (FMR
Far East), Fidelity Investments Japan Ltd. (FIJ), Fidelity International
Investment Advisors (FIIA), and Fidelity International Investment Advisors
(U.K.) Limited (FIIA(U.K.)L), with respect to the fund.
(Z) Fidelity Management & Research Company has entered into sub-advisory
agreements with the following affiliates: FMR U.K., FMR Far East, FIIA, and
FIIA(U.K.)L, with respect to the fund.
2
<PAGE>
(pound) Fidelity Management & Research Company has entered into sub-advisory
agreements with FMR U.K and FMR Far East, with respect to the fund.
([]) The ratio of net advisory fees to average net assets paid to FMR
represents the amounts as of the prior fiscal year-end. Updated ratios
will be presented for each class of shares of the fund when the next
fiscal year-end figures are available.
3
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------------
FIDELITY FIXED-INCOME TRUST: FIDELITY INVESTMENT GRADE BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, William O. McCoy, and Eric D. Roiter, or any one or more of them, attorneys,
with full power of substitution, to vote all shares of FIDELITY FIXED-INCOME
TRUST: FIDELITY INVESTMENT GRADE BOND FUND which the undersigned is entitled to
vote at the Special Meeting of Shareholders of the fund to be held at the office
of the trust at 82 Devonshire St., Boston, MA 02109, on April 14, 1999 at 9:00
a.m. Eastern time and at any adjournments thereof. All powers may be exercised
by a majority of said proxy holders or substitutes voting or acting or, if only
one votes and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt of
the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as
your name appears on this
Proxy. When signing in a
fiduciary capacity, such as
executor, administrator,
trustee, attorney, guardian,
etc., please so indicate.
Corporate and partnership
proxies should be signed by
an authorized person
indicating the person's
title.
Date_____________, 1999
----------------------------
----------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316146109/fund # 026
<PAGE>
Please refer to the Proxy Statement discussion of each of these matters. IF NO
SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL. As to any
other matter, said attorneys shall vote in accordance with their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- --------------------------------------------------------------------------------
1. To elect the twelve nominees specified FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
below as Trustees: Ralph F. Cox, Phyllis
Burke Davis, Robert M. Gates, Edward C.
Johnson 3d, E. Bradley Jones, Donald J.
Kirk, Peter S. Lynch, William O. McCoy,
Gerald C. McDonough, Marvin L. Mann,
Robert C. Pozen, and Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE(S), WRITE THE
NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.)
- --------------------------------------------------------------------------------
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the fund.
3. To authorize the Trustees to adopt an FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
amended and restated Declaration of
Trust.
4. To adopt a new fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
policy for the fund permitting the fund
to invest all of its assets in another
open-end investment company managed by
FMR or an affiliate with substantially
the same investment objective and
policies.
5. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
contract for the fund.
7. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
8. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
agreement with Fidelity Management &
Research (Far East) Inc. for the fund.
9. To eliminate certain fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 9.
investment policies of the fund.
14. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ]14.
limitation concerning diversification
to exclude "securities of other
investment companies" from the
limitation for the fund.
maps product code-PXC-0299 cusip # 316146109/fund # 026
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
Fidelity Investments
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
Please detach at perforation before mailing.
- --------------------------------------------------------------------------------
FIDELITY FIXED-INCOME TRUST: FIDELITY SHORT-TERM BOND FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, William O. McCoy, and Eric D. Roiter, or any one or more of them, attorneys,
with full power of substitution, to vote all shares of FIDELITY FIXED-INCOME
TRUST: FIDELITY SHORT-TERM BOND FUND which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the fund to be held at the office of
the trust at 82 Devonshire St., Boston, MA 02109, on April 14, 1999 at 9:00 a.m.
Eastern time and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if only one
votes and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt of
the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as
your name appears on this
Proxy. When signing in a
fiduciary capacity, such as
executor, administrator,
trustee, attorney, guardian,
etc., please so indicate.
Corporate and partnership
proxies should be signed by
an authorized person
indicating the person's
title.
Date _____________, 1999
----------------------------
----------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316146208/fund # 450
<PAGE>
Please refer to the Proxy Statement discussion of each of these matters. IF NO
SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL. As to any
other matter, said attorneys shall vote in accordance with their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- --------------------------------------------------------------------------------
1. To elect the twelve nominees specified FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
below as Trustees: Ralph F. Cox, Phyllis
Burke Davis, Robert M. Gates, Edward C.
Johnson 3d, E. Bradley Jones, Donald J.
Kirk, Peter S. Lynch, William O. McCoy,
Gerald C. McDonough, Marvin L. Mann,
Robert C. Pozen, and Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE
FOR ANY INDIVIDUAL NOMINEE(S), WRITE THE
NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.)
- --------------------------------------------------------------------------------
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the
fund.
3. To authorize the Trustees to adopt FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
an amended and restated Declaration
of Trust.
4. To adopt a new fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
policy for the fund permitting the
fund to invest all of its assets in
another open-end investment company
managed by FMR or an affiliate with
substantially the same investment
objective and policies.
5. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 5.
contract for the fund.
7. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
8. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
agreement with Fidelity Management
& Research (Far East) Inc. for the
fund.
10. To eliminate certain fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ]10.
investment policies of the fund.
14. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ]14.
limitation concerning diversification
to exclude "securities of other
investment companies" from the
limitation for the fund.
15. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ]15.
limitation concerning underwriting for
the fund.
16. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ]16.
limitation concerning concentration
of investments in a single industry for
the fund.
maps product code-PXC-0299 cusip # 316146208/fund # 450
<PAGE>
Vote this proxy card TODAY! Your prompt response will save
the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------------
FIDELITY FIXED-INCOME TRUST: SPARTAN GOVERNMENT INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, William O. McCoy, and Eric D. Roiter, or any one or more of them, attorneys,
with full power of substitution, to vote all shares of FIDELITY FIXED-INCOME
TRUST: SPARTAN GOVERNMENT INCOME FUND which the undersigned is entitled to vote
at the Special Meeting of Shareholders of the fund to be held at the office of
the trust at 82 Devonshire St., Boston, MA 02109, on April 14, 1999 at 9:00 a.m.
Eastern time and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if only one
votes and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt of
the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name
appears on this Proxy. When signing in a
fiduciary capacity, such as executor,
administrator, trustee, attorney, guardian,
etc., please so indicate. Corporate and
partnership proxies should be signed by an
authorized person indicating the person's
title.
Date__________________, 1999
----------------------------
----------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316146307/fund # 453
<PAGE>
Please refer to the Proxy Statement discussion of each of these matters. IF NO
SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL. As to any
other matter, said attorneys shall vote in accordance with their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- --------------------------------------------------------------------------------
1. To elect the twelve nominees FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
specified below as Trustees:
Ralph F. Cox, Phyllis Burke
Davis, Robert M. Gates, Edward
C. Johnson 3d, E. Bradley
Jones, Donald J. Kirk, Peter S.
Lynch, William O. McCoy, Gerald
C. McDonough, Marvin L. Mann,
Robert C. Pozen, and Thomas R.
Williams.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE NOMINEE(S)
ON THE LINE BELOW.)
- --------------------------------------------------------------------------------
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the fund.
3. To authorize the Trustees to adopt FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
an amended and restated Declaration
of Trust.
4. To adopt a new fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
investment policy for the fund
permitting the fund to invest
all of its assets in another
open-end investment company
managed by FMR or an affiliate
with substantially the same
investment objective and
policies.
11. To eliminate certain fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ]11.
investment policies of the fund.
13. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ]13.
limitation concerning real estate
for the fund.
14. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ]14.
limitation concerning diversification
to exclude "securities of other
investment companies" from the
limitation for the fund.
maps product code-PXC-0299 cusip # 316146307/fund # 453
<PAGE>
Vote this proxy card TODAY! Your prompt response will save
the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------------
FIDELITY FIXED-INCOME TRUST: FIDELITY HIGH INCOME FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, William O. McCoy, and Eric D. Roiter, or any one or more of them, attorneys,
with full power of substitution, to vote all shares of FIDELITY FIXED-INCOME
TRUST: FIDELITY HIGH INCOME FUND which the undersigned is entitled to vote at
the Special Meeting of Shareholders of the fund to be held at the office of the
trust at 82 Devonshire St., Boston, MA 02109, on April 14, 1999 at 9:00 a.m.
Eastern time and at any adjournments thereof. All powers may be exercised by a
majority of said proxy holders or substitutes voting or acting or, if only one
votes and acts, then by that one. This Proxy shall be voted on the proposals
described in the Proxy Statement as specified on the reverse side. Receipt of
the Notice of the Meeting and the accompanying Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as your name
appears on this Proxy. When signing in a
fiduciary capacity, such as executor,
administrator, trustee, attorney, guardian,
etc., please so indicate. Corporate and
partnership proxies should be signed by an
authorized person indicating the person's
title.
Date_________________, 1999
---------------------------
---------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip # 316146406/fund # 455
<PAGE>
Please refer to the Proxy Statement discussion of each of these matters. IF NO
SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL. As to any
other matter, said attorneys shall vote in accordance with their best judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- --------------------------------------------------------------------------------
1. To elect the twelve nominees FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
specified below as Trustees:
Ralph F. Cox, Phyllis Burke
Davis, Robert M. Gates, Edward
C. Johnson 3d, E. Bradley
Jones, Donald J. Kirk, Peter S.
Lynch, William O. McCoy, Gerald
C. McDonough, Marvin L. Mann,
Robert C. Pozen, and Thomas R.
Williams.
(INSTRUCTION: TO WITHHOLD
AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE(S), WRITE
THE NAME(S) OF THE NOMINEE(S)
ON THE LINE BELOW.)
- --------------------------------------------------------------------------------
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the fund.
3. To authorize the Trustees to adopt an FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
amended and restated Declaration of
Trust.
4. To adopt a new fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
policy for the fund permitting the
fund to invest all of its assets in
another open-end investment company
managed by FMR or an affiliate with
substantially the same investment
objective and policies.
6. To approve an amended management FOR [ ] AGAINST [ ] ABSTAIN [ ] 6.
contract, including a management fee
structure change, for the fund.
7. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 7.
agreement with Fidelity Management &
Research (U.K.) Inc. for the fund.
8. To approve an amended sub-advisory FOR [ ] AGAINST [ ] ABSTAIN [ ] 8.
agreement with Fidelity Management &
Research (Far East) Inc. for the fund.
12. To eliminate certain fundamental FOR [ ] AGAINST [ ] ABSTAIN [ ]12.
investment policies of the fund.
14. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ]14.
limitation concerning diversification
to exclude "securities of other
investment companies" from the
limitation for the fund.
16. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ]16.
limitation concerning concentration
of investments in a single industry for
the fund.
maps product code-PXC-0299 cusip # 316146406/fund # 455
<PAGE>
Vote this proxy card TODAY! Your prompt response will
save the expense of additional mailings.
Return the proxy card in the enclosed envelope or mail to:
FIDELITY INVESTMENTS
Proxy Department
P.O. Box 9107
Hingham, MA 02043-9848
PLEASE DETACH AT PERFORATION BEFORE MAILING.
- --------------------------------------------------------------------------------
FIDELITY FIXED-INCOME TRUST: SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND
PROXY SOLICITED BY THE TRUSTEES
The undersigned, revoking previous proxies, hereby appoint(s) Edward C. Johnson
3d, William O. McCoy, and Eric D. Roiter, or any one or more of them, attorneys,
with full power of substitution, to vote all shares of FIDELITY FIXED-INCOME
TRUST: SPARTAN SHORT-INTERMEDIATE GOVERNMENT FUND which the undersigned is
entitled to vote at the Special Meeting of Shareholders of the fund to be held
at the office of the trust at 82 Devonshire St., Boston, MA 02109, on April 14,
1999 at 9:00 a.m. Eastern time and at any adjournments thereof. All powers may
be exercised by a majority of said proxy holders or substitutes voting or acting
or, if only one votes and acts, then by that one. This Proxy shall be voted on
the proposals described in the Proxy Statement/Prospectus and in the Proxy
Statement as specified on the reverse side. Receipt of the Notice of the Meeting
and the accompanying Proxy Statement/Prospectus and Proxy Statement is hereby
acknowledged.
NOTE: Please sign exactly as
your name appears on this
Proxy. When signing in a
fiduciary capacity, such as
executor, administrator,
trustee, attorney, guardian,
etc., please so indicate.
Corporate and partnership
proxies should be signed by
an authorized person
indicating the person's
title.
Date_____________, 1999
----------------------------
----------------------------
Signature(s) (Title(s), if applicable)
PLEASE SIGN, DATE, AND RETURN
PROMPTLY IN ENCLOSED ENVELOPE
cusip #316146505/fund #474
<PAGE>
Please refer to the Proxy Statement/Prospectus discussion for matter A. Please
refer to the Proxy Statement discussion for matters 1, 2, 3, 4, and 14.
IF NO SPECIFICATION IS MADE, THE PROXY SHALL BE VOTED FOR THE PROPOSAL. As to
any other matter, said attorneys shall vote in accordance with their best
judgment.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE FOLLOWING:
- --------------------------------------------------------------------------------
Proxy Statement/Prospectus Proposal
A. To approve an Agreement and Plan of FOR [ ] AGAINST [ ] ABSTAIN [ ] A.
Reorganization between Spartan
Short-Intermediate Government Fund and
Fidelity Intermediate Government Income
Fund, a fund of Fidelity Income Fund,
providing for the transfer of all of the
assets of Spartan Short-Intermediate
Government Fund to Fidelity Intermediate
Government Income Fund in exchange solely
for shares of beneficial interest in
Fidelity Intermediate Government
Income Fund and the assumption by Fidelity
Intermediate Government Income Fund of
Spartan Short-Intermediate Government Fund's
liabilities, followed by the distribution of
shares of Fidelity Intermediate Government
Income Fund to shareholders of Spartan
Short-Intermediate Government Fund in
liquidation of Spartan Short-Intermediate
Government Fund.
- --------------------------------------------------------------------------------
Proxy Statement Proposals
1. To elect the twelve nominees specified FOR [ ] AGAINST [ ] ABSTAIN [ ] 1.
below as Trustees: Ralph F. Cox, Phyllis
Burke Davis, Robert M. Gates, Edward C.
Johnson 3d, E. Bradley Jones, Donald J.
Kirk, Peter S. Lynch, William O. McCoy,
Gerald C. McDonough, Marvin L. Mann,
Robert C. Pozen, and Thomas R. Williams.
(INSTRUCTION: TO WITHHOLD AUTHORITY TO
VOTE FOR ANY INDIVIDUAL NOMINEE(S),
WRITE THE NAME(S) OF THE NOMINEE(S)
ON THE LINE BELOW.)
- --------------------------------------------------------------------------------
2. To ratify the selection of FOR [ ] AGAINST [ ] ABSTAIN [ ] 2.
PricewaterhouseCoopers LLP as
independent accountants of the fund.
3. To authorize the Trustees to adopt FOR [ ] AGAINST [ ] ABSTAIN [ ] 3.
an amended and restated Declaration
of Trust.
4. To adopt a new fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 4.
policy for the fund permitting the
fund to invest all Of its assets in
another open-end investment company
managed by FMR or an affiliate with
substantially the same investment
objective and policies.
<PAGE>
14. To amend the fundamental investment FOR [ ] AGAINST [ ] ABSTAIN [ ] 14.
limitation concerning diversification
to exclude "securities of other
investment companies" from the
limitation for the fund.
SSG-PXC-0299 cusip #316146505/fund #474
